Citigroup Inc., the largest U.S. bank, said on Friday that strong international growth fueled a higher-than-expected 18 percent increase in quarterly profit.

Revenue rose faster than expenses for a second consecutive quarter, as Chief Executive Charles Prince continued to emphasize controlling costs amid pressure from many shareholders to re-energize a long-lagging share price. Credit losses soared, but at a rate in line with levels at other banks.

Citigroup shares rose 1.2 percent in early electronic trading.

Net income for Citigroup rose to $6.23 billion, or $1.24 per share, from $5.27 billion, or $1.05, a year earlier.

Revenue jumped 20 percent to $26.63 billion, while operating expenses were up 16 percent. Excluding acquisitions, revenue rose 16 percent, and costs rose 12 percent.

Excluding items, profit totaled $1.18 per share, according to Reuters Estimates, 5 cents above the average Wall Street expectation. Analysts, on average, looked for revenue of $24.88 billion.

The quarter included the early impact of a cost-cutting plan announced in April. It was designed to slash 17,000 jobs to help cut spending by $4.58 billion.

Prince said the program is generating improved efficiencies, as Citigroup continues to get more international business. International profit rose 35 percent to $3.04 billion, while revenue increased 34 percent to $12.56 billion.

Citigroup shares advanced to $51.75 in premarket trading after closing Thursday at $51.13 on the New York Stock Exchange. They have fallen 8 percent this year, compared with a 4 percent decline in the Philadelphia KBW Bank Index.

Among other large U.S. banks, No. 2 Bank of America Corp. posted a 5 percent increase in quarterly profit, while No. 3 JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) recorded a 20 percent gain earlier this week.

INVESTMENT BANKING SURGES

Citigroup credit costs rose $934 million, including an increase of $259 million in net credit losses and a $465 million charge to boost loss reserves.

The bank set aside $2.52 billion for loan losses, up 75 percent from a year earlier. That compares with an 80 percent increase at Bank of America and a tripling at JPMorgan.

Corporate and investment banking profit surged 64 percent to $2.83 billion, as revenue increased 33 percent to $8.96 billion. Revenue increased 24 percent in fixed income markets, 67 percent in equity markets and 28 percent in investment banking.

Profit at its largest business -- its consumer unit -- fell 15 percent to $2.7 billion, though revenue increased 8 percent to $13.66 billion. Results were weaker in the United States, as credit quality deteriorated. Citigroup opened 160 retail banking and consumer finance offices in the quarter.

Wealth management profit, including the Smith Barney brokerage and private bank, rose 48 percent to $514 million. Profit from alternative investments rose 77 percent to $456 million.

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