Updated from 8:07 a.m. EDT

Driven by strong growth in consumer banking and advising on mergers and acquisitions,

Citigroup

(C) - Get Report

, the nation's largest financial services firm, Tuesday reported quarterly earnings that beat Wall Street estimates.

The New York-based company reported net income of $3.09 billion, or 67 cents a share, up 27% from $2.4 billion, or 53 cents a share, for the same period a year ago. Revenue climbed 15% to $16.8 billion, compared with $14.6 billion in the same quarter a year ago. The Wall Street consensus was for Citigroup to earn 65 cents a share, according to market research firm

First Call/Thomson Financial

.

The company, which owns

Travelers Insurance

, the brokerage firm

Salomon Smith Barney

and

Citibank

, reported robust growth across its various business units.

"The stock has been heavily penalized in the past few weeks under the belief they were going to show sizable loan losses," said Richard Bove, an analyst at

TheStreet Recommends

Raymond James

who covers Citigroup. "It never happened. So there was a party that occurred that no one came to. Citigroup earnings were pretty good." Bove has a buy rating for Citigroup, and his firm has no underwriting relationship with the financial services giant.

Salomon's Pleasant Surprise

Earnings at Salomon Smith Barney were much higher than expected and was the main reason for the earnings surprise, noted another analyst. Salomon Smith Barney reported net income of $622 million, much higher than the $537 million that David Berry, an analyst at

Keefe Bruyete & Woods

, expected.

He said anxiety about investment banking and commercial credit risk existed among investors prior to Citigroup's earnings release. "On both accounts, Citigroup did pretty good," he said. Berry has a buy on Citigroup, and his firm has not performed underwriting for the company. He has a $72 a share 12-month price target.

Writeoffs on the commercial loan side increased a paltry $42 million in the second quarter, he said, all of which was from abroad. While on the consumer side, the write off ratio declined to 1.88% of total loans, compared with a 2.06% from the prior quarter.

Citigroup's credit card business has posted strong results, with income rising 32% to $476 million. Its charge off rates for credit cards declined to 3.5% in the third quarter, compared to a 3.96% rate in the second quarter.

Overall, income rose 17% in its global consumer group, which includes consumer banking and credit cards. Its global corporate and investment bank reported 40% growth in income, while its asset management business saw revenue growth of 15% and a 24% return on equity.

Associates First Capital Meets Estimates

Also Tuesday,

Associates First Capital

(AFS)

, which Citigroup agreed to

acquire in September for over $31 billion in stock, reported quarterly earnings that met Wall Street estimates.

The Irving, Texas-based company said it earned $442 million, or 61 cents a share, in the third quarter. This was an increase of 15% from the same period a year ago, and matched the Wall Street consensus estimate of 61 cents a share, according to First Call/Thomson Financial.

Citigroup finished Tuesday regular trading down $1.44, or 3%, at $49.38.