By Max Clarke

Citigroup has defied expectations to post quarterly profits of $3.3bn for the three months ending June 2011.

Revenue across the US banking giant (NYSE: C) topped $20.6 billion, earning $1.09 per share- up from $0.90 the previous quarter.

"Citi achieved another solid quarter of operating performance as we continue to execute our strategy,” said Vikram Pandit, Citi’s CEO. “We produced growth in both loans and deposits in Citicorp, reduced assets in Citi Holdings, continued to invest in our core businesses and improved our financial strength. Although the near-term macroeconomic outlook is uneven, Citi is consistently profitable, and we remain focused on producing responsible growth by serving our clients."

Citicorp revenues were essentially flat from the prior year period, while the overall decline in Citigroup revenues from the prior year largely reflected lower results in Citi Holdings and Corporates.

John Gerspach, Citi's Chief Financial Officer, said: "We expect to begin returning capital to shareholders next year and end that year with an 8%-9% Tier 1 Common Capital Ratio under Basel III. During the first half of 2011, we added an estimated $9 billion in Basel III regulatory capital through the ‘multiplier effect' created by the combined impact of earnings and the utilization of our deferred tax assets. In addition, at the end of 2012, we currently expect Citigroup's risk-weighted assets under Basel III to be in the range of 135% of what they would be under Basel I and, more importantly, Citicorp's risk-weighted assets to be approximately 120% of what they would be under Basel I."

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