By Neha Dimri and David Henry
(Reuters) - Citigroup Inc (N:C), the third biggest U.S. bank by assets, reported its highest quarterly profit in eight years as restructuring and cost cuts paid off and legal expenses plunged.
Citi, in a bid to simplify its structure, has been selling retail operations in several countries, shrinking its U.S. branch network and disposing of non-core businesses.
The bank's shares rose 2.6 percent to $57.95 in premarket trading on Thursday after its adjusted earnings handily beat analysts' estimates.
Operating expenses in Citicorp, which holds the bank's core businesses, fell 6 percent to $9.8 billion in the second quarter and declined 1 percent when adjusted for currency changes.
The expenses included $61 million in restructuring charges, down from $397 million a year earlier.
Citi shrank the assets of Citi Holdings, which houses the businesses it plans to sell, by 22 percent. The unit posted earnings of $157 million for the quarter.
"Through active expense and balance sheet discipline, we are on track to reach our financial targets for the year," Chief Executive Michael Corbat said in a statement.
Citi's return on average assets was 1.06 percent in the quarter ended June 30, higher than Corbat's target of at least 0.9 percent for the year.
Revenue from the bank's fixed income business fell 1 percent to $3.06 billion, a much smaller decline than that reported by its Wall Street rivals.
Goldman Sachs Group Inc (N:GS), which reported a steep fall in profit earlier on Thursday, said net revenue from fixed-income, currency and commodity trading plunged 28 percent.
Bank of America Corp's (N:BAC) fixed income revenue fell 9.3 percent, while JPMorgan Chase & Co (N:JPM) posted a 10 percent drop.
Citi's net income rose to $4.85 billion, or $1.51 per share, in the second quarter from $181 million, or 3 cents per share, a year earlier, when the bank was hit by a $3.8 billion legal charge.
Adjusting for legal costs and some accounting items, earnings rose 18 percent to $4.65 billion, or $1.45 per share, beating the average analyst estimate of $1.34 per share, according to Thomson Reuters I/B/E/S.
Total adjusted revenue fell 1.5 percent to $19.16 billion, coming slightly above analysts' expectations of $19.11 billion.