Citigroup’s earnings soared 42% in the second quarter, reaching $4.2 billion, or $1.34 per share, compared to $2.9 billion, or 95 cents a share, for the same period a year earlier.

In addition, the mega bank posted net revenue of $20.5 billion in the second quarter of 2013, up from $18.4 billion in 2Q 2012.

The surge in revenue and earnings per share was partially offset by a lower loan loss reserve release and higher legal fees and related costs.

Citigroup experienced an $833 million improvement in net credit loss, attributing it to a $225 million decline in net loan loss reserve releases.

Michael Corbat, CEO of Citi (C), said, “Our businesses performed well during the quarter and these results are well-balanced through our products and geographies, especially in the emerging markets, where growth is being challenged.”

Meanwhile, Citigroup’s asset quality improved as total non-accrual assets dropped to $10.1 billion, a 12% reduction compared to the same time last year.

Retail banking revenues fell 4% to $1.6 billion from the second quarter 2012, reflecting lower mortgage origination and servicing revenue.

However, this was partially offset by a gain of approximately $180 million from the sale of a mortgage portfolio during the quarter.

The bank noted retail banking revenues are predicted to be negatively hit by lower mortgage origination revenue and spread compression.

Corbat expanded on this saying, “We also continued to make progress in several critical areas. We reduced the earnings drag caused by Citi Holdings, where we saw the largest percentage reduction of assets since 2010.”

“We increased our already strong capital levels, reaching an estimated Basel III Tier 1 Common ratio of 10%. Generating consistent and quality earnings is a key priority and this quarter met that goal,” he said. 

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