Banking giant Citigroup (C) saw its third-quarter profit plummet to $468 million, or 15 cents a share, from $3.8 billion, or $1.23 a share, a year earlier.

Retail banking revenues grew 35% to $1.7 billion from the third quarter 2011, primarily reflecting higher mortgage revenues.

Still, overall lending at the bank subsided  with lending revenue falling 81% from last year to $194 million. Net credit losses tied to incremental mortgage charge-offs included $635 million of incremental mortgage charge-offs in Citi Holdings. The charge offs were required by the Office of the Comptroller of Currency to deal with loans in which the borrower had moved through Chapter 7 bankruptcy.

Allowances for loan losses fell to 4% of all loans or $25.9 billion, compared to $32.1 billion a year ago. However, Citi attributes its weak report to a $4.7 billion loss related to the joint venture brokerage business () Smith Barney.

"The $1.5 billion net release of loan loss reserves in the quarter increased 6% versus the prior year period," Citi said.

Mortgage activity grew during the period, with the bank reporting a 35% increase in retail banking revenue, which now reaches $1.7 billion and is a reflection of higher mortgage revenue, Citi said.

The company's earnings included a large pre-tax loss of $4.7 billion from the sale of a 14% interest in Citi's Morgan Stanley Smith Barney joint venture. The company also faced an impairment charge for carrying the remaining 35% value of the joint-venture.