David Henry, Anirban S.

(Reuters) –Citigroup Inc reported Thursday a 48% increase in its third quarter profit. This was comfortably above market expectations, with the bank releasing loan loss reserves. It also reaped a windfall from investment banking advice and equity underwriting fees.

Net income increased 48% from $3.1 million, or $1.36, to $4.6billion in the third quarter of last year. Refinitiv IBES data shows that analysts expected an average profit of $1.65 per shared.

Profits were buoyed when the bank decided to remove $1.16 million of losses reserves, which it had built in response to the potential for sour loan defaults that never materialized. An earlier year Citigroup (NYSE) had increased its reserve by $436 millions.

Investment banking revenues increased 39%, to $1.9 billion. This offsets the 16% drop in fixed-income income from one year prior when markets were volatile.

Lower net interest revenues and higher expenses influenced results. This was also true for customers who borrowed their stimulus money to repay their credit cards loans.

Jane Fraser, Chief Executive Officer of the company said that $4.6 billion was a good amount considering the current environment.

Although net interest revenue decreased 1% year-over-year, it was still 2% greater than in the previous quarter. It suggests that the trend towards a downward turn which began when the pandemic started and Federal Reserve cut interest rates near zero, and many borrowers paid off their outstanding loans, is now over.

Citigroup’s Treasury and Trade Solutions businesses were also affected by lower interest rates. The business saw its revenue drop 4% despite collecting more fees and seeing growth in trading.

North America’s revenue from Citi-branded card declined by 1% while the retail sales of cards decreased by 6%.

Results include the loss from the sale of the Australia consumer banking company. Revenue increased by 3% after excluding the loss from the sale. This was driven by the institution business.

The company increased its spending on technology and people to meet regulators’ demands. Operating expenses rose 5% to $11.5billion.

Citigroup has been particularly worried about its expenses, as it is yet to disclose how much and how long it will need to fulfill regulators’ requirements and fix its system.

Additionally, the bank spends more money on its wealth management and transaction services for companies.

Fraser believes that the increase in spending will help to boost what she calls Citigroup’s transformation into an efficient, focused and profitable company. This will allow it to earn higher returns than its peer companies.

Citigroup is a company that has had lower equity returns than its rivals for over ten years. Additionally, the stock market value the company at less money than it shows on the balance sheet.