plenty of risks here. While trying to repair its damaged brand in the U.S., management has been working to repair Citigroup's global presence, which has come under attack by JPMorgan Chase ( JPM). Not to mention the fact that Citigroup has been losing share to both Wells Fargo ( WFC) and Bank of America ( BAC) in overall loan growth during a period where Citigroup has recently installed Michael Corbat as CEO. at least I thought. Citigroup, which for the quarter posted a 42% increase in net income, had other ideas. Revenue surged 11%, almost doubling some analysts' estimates. Even more impressive is that even when scrutinizing the results for things like the debt and credit valuation adjustments, Citigroup still beat earnings-per-share estimates by 8 cents, which represents 25% year over year growth. I'm not suggesting that Citi is now free and clear from the risks that I've mentioned above. What is clear, though, is that management has figured out ways to create value by focusing on credit-cost reduction and growing income from banking fees.
Fee income, which was up 19% in the quarter, is once again a significant driver of Citigroup's profits, helped by better-than-expected trading revenue. What this means is that, despite the weakness that remain in Citi's core banking operation, Citi, along with JPMorgan, is once again near the top in terms of investment banking. Equally impressive is that despite the 10-basis-point sequential decline in net interest margin (NIM), the bank still benefited from an improvement in average earning assets, which contributed to a 3% year-over-year improvement in net interest income. In the April quarter, management issued some warnings to investors and talked about working through "legacy issues," many of which have impacted upon Citigroup's ability to move forward from the height of the credit crisis. I've said it recently: I think management underestimated their ability to right this ship in the quicker-than-expected pace that they have. As I've said before, Citigroup is not out of the woods yet. I believe the challenges that still remain in consumer banking (its largest business) serve as evidence that there is work still left to do. But the bank is navigating the trough pretty well, helped (in part) by its diligent operating expenses control - a strategy that's also working for Wells Fargo. Follow @rsaintvilus This article was written by an independent contributor, separate from TheStreet's regular news coverage.