updated 10/14/2004 7:58:30 AM ET 2004-10-14T11:58:30

Citigroup Inc., the nation's largest financial institution, on Thursday reported third-quarter earnings of a record $5.31 billion, or $1.02 a share, up 13 percent from a year ago and handily beating analysts' estimates.

Strength in retail banking offset weaknesses in capital markets and bond trading, the New York-based bank said.

Profits in the July-September quarter compared with earnings of $4.7 billion, or 90 cents a share, in the same period a year earlier.

Analysts had projected third-quarter profits of 99 cents a share.

Revenues for the third quarter were $20.5 billion, up 6 percent from $19.4 billion a year ago.

"Our third quarter results demonstrate the benefits of our diversified business platform, as strength in our consumer businesses offsets the impact of sluggish capital markets activity," chief executive Charles Prince said in a statement accompanying the results.

He said the consumer business "delivered record results," with growth in credit card income, consumer finance and retail banking.

And, in response to recent regulatory problems in Japan, Prince emphasized that Citigroup was putting more focus on values.

"Importantly, we continued to take numerous steps toward our goal of continually improving the way we do business and becoming the most respected financial services company in the world," Prince said. "During this year, we have strengthened the independence and capabilities of our internal control and compliance structure, improved how we manage our businesses, and intensified communication with employees about the kind of company we aspire to be."

Last month, Japanese regulators ordered Citigroup to close down its private banking operations for "severe legal violations." Citibank Japan issued an apology and said it will work to prevent a recurrence of the violations.

For the first nine months of the year, Citigroup reported profits of $11.73 billion, or $2.24 a share, down from earnings of $13.09 billion, or $2.51 a share, in 2003. This year's results include a $4.95 billion charge related to the settlement of charges for Citigroup's role in the WorldCom Inc. bankruptcy and an increase in litigation reserves.

For the first nine months of the year, revenue totaled $64.3 billion, up 12 percent from $57.29 billion in 2003.

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