NEW YORK -- Citigroup isn't convinced the economy is back.
The bank's executives were more cautious than celebratory Monday, even after announcing strong first-quarter results.
Citigroup's investment bank advised more companies on mergers and acquisitions; its retail bank wrote out more mortgages; it set aside less money for bad loans. The bank's earnings beat expectations and its stock price rose. Even so, executives stopped short of declaring victory.
"The environment remains challenging and we are sure to be tested as we go through the year," said CEO Mike Corbat.
Chief Financial Officer John Gerspach says the bank doesn't think consumers are confident enough to drive the economy, whose growth he described as uneven. "We're still going to be moving somewhat sideways."
Citigroup's view was more pessimistic than those of rivals JPMorgan Chase and Wells Fargo, whose CEOs last week described the economy as improving and consumer sentiment as healthy. Both banks reported record earnings but their revenue slipped, lowering their stock prices.
The split in the banks' outlooks appeared in the past two quarters as well. Citigroup, for example, wasn't as confident as its competitors about a comeback in the housing market.
Monday's results marked Citi's first full quarter under Corbat, who took over last fall from Vikram Pandit. Pandit stepped down under pressure from a board that was unhappy with his efforts to turn around the bank. Corbat is now under the same pressure.
So far he's been cutting jobs and trimming businesses in slow-growth areas, continuing Pandit's plan to slim down the bank and make it more manageable and less susceptible to special scrutiny from regulators. In a call with reporters, CFO Gerspach said he didn't anticipate any "large scale repositioning charges," but rather a steady move toward more efficiency.
"To use a baseball analogy, a series of singles," Gerspach said.
More on Citi's results:
--Investment banking vs. retail banking: Investment banking revenue there jumped 31 percent while revenue from consumer banking was flat. Citi's investment banking unit advised more companies on mergers and acquisitions and underwrote more stock and bond offerings. In the consumer bank, credit card revenue inched down.
--Mortgages: Citigroup funded $18 billion in mortgages in North America, up 26 percent from a year earlier. For the first time, the bank released some of the reserves it had set aside to cover bad mortgage loans in Citi Holdings, the unit where it has quarantined troubled assets from the financial crisis. Investors, Gerspach noted, are also willing to pay more for investments made of mortgages.
Does this mean, a reporter asked, that "even John Gerspach (is) positive about the housing market?"
"I wouldn't say that I'm positive about the housing market," he replied.
--What else helped results: The bank's own borrowing costs fell as it retired debt. The drag from Citi Holdings shrank: The unit's loss narrowed to $789 million from more than $1 billion a year earlier.
The bank continued to free up money it had set aside for bad loans. Total allowance for loan losses is $23.7 billion, or 3.7 percent of total loans, down from $29 billion, or 4.5 percent of total loans, a year earlier.
Citi also benefited from a deferred tax credit. When companies have big losses, they get a break on taxes. Citigroup, which suffered big losses in 2008, was allowed to hold onto tax credits to use in the future, in years when it was profitable.
--Around the world: Revenue climbed 20 percent in North America, but rose only 4 percent in Latin America and 1 percent in Asia. It fell 3 percent in the unit covering Europe, the Middle East and Africa. Gerspach said Asia was "not seeing what I'd consider to be vibrant growth." Europe, he said, is still recovering, and the bank probably wouldn't look to expand there except to support existing clients with specific services.
--Legal expenses: Gerspach said the bank recorded about $700 million in legal expenses in the first quarter. That's on pace with last year, when it recorded about $2.8 billion. The bank's higher legal expenses were related to Citi Holdings, but Gerspach declined to give details.
--By the numbers: Citigroup earned $4 billion, up 17 percent from a year earlier, after stripping out the effects of an accounting charge. That amounted to $1.29 per share, beating the $1.17 expected by Wall Street analysts.
Revenue totaled $20.8 billion, up 3 percent from a year earlier. That also beat the $20.2 billion that analysts had expected.
The stock rose more than 2 percent, or $1.13, to $45.91, in midday trading.