NEW YORK ( TheStreet) -- Citigroup ( C) reported better than expected earnings for a second straight quarter on Friday amid substantial improvement in credit costs.

The bank said it earned $2.7 billion, or 9 cents a share, for the June-ending quarter. That's down from blowout earnings of $4.4 billion, or 15 cents a share, and year-ago net income of $4.1 billion, or 28 cents a share.

Total revenue, net of interest expense, came in at $22.1 billion for the latest three months, down from $25.4 billion in the first quarter, and $30 billion in the year-ago period.

Citigroup cited lower revenue from its Securities and Banking and Special Asset Pool businesses for the sequential decline in both profits and revenue.

The average estimate of analysts polled by Thomson Reuters was for a profit of 5 cents a share in the June period on revenue of $22.1 billion.

The bank said its provision for credit losses and for benefits and claims was $6.7 billion in the latest quarter, representing a sequential decline of $2 billion. This was Citi's lowest provision since the third quarter of fiscal 2007.

Revenue from Citigroup's so-called good bank, Citicorp totaled $16.5 billion, while profit from the operations came in at $3.8 billion. Citigroup's bad bank entity brought in revenue of $4.9 billion and recorded a loss of $1.2 billion, the company said.

As expected Citigroup's securities and banking revenue dropped in the quarter, however credit costs saw improvement. The bank recorded a net release of loan loss reserves unfunded lending commitments of $1.5 billion vs. $53 million reserve release in the prior quarter. The reserve release in the quarter consisted of $827 million for consumer loans and $683 million for corporate loans and unfunded lending commitments, Citigroup said.

Citigroup's total net credit losses declined 5% for the fourth consecutive quarter to $8 billion.

The bank's Tier-1 capital ratio stood at 12%, while Tier-1 common ratio was 9.7% at June 30.

In a statement, CEO Vikram Pandit said he was pleased with the operating results for the quarter.

"While the market environment lowered revenues in Securities and Banking, credit improved for the fourth consecutive quarter," Pandit said. "We saw growth internationally, particularly in Transaction Services and Regional Consumer Banking in Latin America and Asia. We continue to reduce the size of Citi Holdings, and it now makes up less than a quarter of Citigroup's balance sheet."

Pandit continued: "Although economic conditions remain challenging and global regulatory frameworks are uncertain, we believe these results demonstrate that the difficult decisions made by our management team have put in place all the elements for sustained profitability."

Citigroup shares were falling 0.7% before the market opened. The stock closed Thursday down 1.2% to $4.16 on volume of roughly 679 million shares.

The stock has seen significantly lower trading volume in recent weeks. The U.S. Treasury, which has sold roughly 20% of its stake in Citigroup, said it would halt the sale of shares for a period of two weeks prior to the bank's earnings release.

--Written by Laurie Kulikowski in New York.

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