Profits bolstered by lower loan losses and a better stock market.
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 C 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.
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 MS . 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.