FORTUNE — Citigroup, the No. 4 U.S. bank by assets, said it earned $4.2 billion in the second quarter. That’s a good bottom line: growth of 44%, and, at $1.34 per share, 14% ahead of estimates.
Much of the gain, nearly $900 million, came from lower losses from bad loans. The bank said the volume of delinquent loans in its core consumer banking unit fell 31%.
But the bank also benefited from a better market, which created work for its Wall Street bankers. Investment banking revenue, driven by stock deals, rose 21%. Another boost came from Asia and Latin America, where Citi’s business was up, despite a slowdown in China and other emerging markets. Expanding overseas has been a goal for Citi, the most internationally focused of the U.S.’s large banks. Overall, Citi’s revenue rose 12% to $20.5 billion.
In another sign of improvement, Citi
said the amount of capital it had on hand to cover soured loans or investments rose by nearly $6 billion. Regulators and investors have been watching those capital levels closely since the financial crisis. What’s more, its risky assets as measured by regulators also dropped. Combined, that gives Citi a ratio of capital to risky assets of 10%, one of the highest among the big banks.
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Still, lending remained weak. The volume of loans Citi had outstanding fell nearly $3 billion to $643 billion in the second quarter.
Nonetheless, the results are the latest sign that CEO Michael Corbat, in charge since last fall, has been pulling off a turnaround — Citi emerged from the financial crisis as the most troubled of the big banks. Corbat has won fans among investors with his what-you-see-is-what-you-get personality and promise to cut costs. Late last year, Corbat said the bank would eliminate 11,000 employees. In the quarter, Citi sold off $18 billion in troubled loans and its remaining stake in its former Smith Barney brokerage unit, which was bought by Morgan Stanley
. Operating expenses fell slightly.
Shares of the bank, which have jumped 30% this year, were up slightly on Monday after the earnings announcement to nearly $52.
“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,” said Corbat in a statement.
The report also continued a string of good reports from big banks at a time when many people are worried that rising interest rates would derail profits in the financial sector. JPMorgan Chase
and Wells Fargo
both reported earnings on Friday that were better than analysts had expected.