9:47 a.m. | Updated Two years after being on the verge of collapse, Citigroup squeezed out a $3 billion profit as it contended with a series of mortgage troubles and sluggish economic growth across the globe.

While Citigroup topped analysts’ consensus estimates by a penny with earnings of 10 cents a share, its earnings fell 32 percent from the period a year earlier, when Citi reported earnings of 15 cents a share, or $4.4 billion. That was the bank’s first profitable quarter since the financial crisis.

Citi’s results were buoyed by the release of $3.3 billion of reserves that had previously been set aside to cover credit card and other loan losses. The move helped offset deeper losses in its domestic mortgage unit and weaker trading and investment banking results.

Unlike previous quarters, when strong results overseas helped lift earnings, nearly every major region and business except Latin America experienced a slowdown. Over all, revenue fell 22 percent, to $19.7 billion, during the period. Expenses also increased by 12 percent, to $9.6 billion.

Finding new sources of growth is crucial to the company’s turnaround, especially given the still-anemic recovery in the United States and uncertainty in Europe, Japan and the Middle East. But Vikram S. Pandit, Citigroup’s chief executive, said that he was pleased with the bank’s first quarter showing.

“Our core businesses performed well despite the difficult economy,” Mr. Pandit wrote in an internal memorandum to employees. “We’ve come a long way — and we continue to move forward. I’m excited that we are carrying 2010’s strong momentum into this year.”

Mr. Pandit is expected to give more details on Thursday, when he addresses investors at Citigroup’s annual shareholder meeting in Midtown Manhattan. The bank is also planning a 10-for-1 reverse stock split early next month that will almost certainly draw criticism from stockholders.

Citigroup’s earnings were tempered by the same factors that weighed on the results of Bank of America and JPMorgan Chase last week.

Despite the solid performance of the Wall Street businesses and improvement in credit quality, its traditional banking businesses have been hit by foreclosure troubles, new financial regulations and a slowdown in home loan growth. Wells Fargo and several big regional players are expected to report similar challenges when they announce their results this week.

Citigroup, whose stock price plummeted during the financial crisis, has been under intense pressure to perform.

For the last three years, Mr. Pandit has been engaged in an ambitious plan to overhaul the company, streamlining its sprawling operations and transforming it from a global financial supermarket into a leaner, more focused lender

At the urging of regulators, he replaced over half of the directors on Citi’s board, overhauled its risk management system and reduced its size. Today, the pile of assets that Citi plans to sell or divest is down to $337 billion, less than half of its peak of $827 billion in 2008. The bank also moved about $12.7 billion in assets to free up capital, which resulted in a pretax charge of $709 million.

Citi is close to completing its plan to shrink its balance sheet. The last big piece that remains is CitiFinancial, its large consumer lending franchise, which is on the block. Several private equity firms are in the final stages of bidding for the group.

Federal regulators acknowledged Citi’s progress when they approved Mr. Pandit’s plan to reinstate the dividend at a token one-tenth of a penny a share. But unlike several major competitors that announced large share buyback programs, Mr. Pandit has said that the bank is unlikely to do so until sometime in 2012.

Growth has been challenging across all divisions. Citigroup’s investment banking group has been inconsistent, and it underperformed in almost every major business category. The unit’s first quarter profit fell 46 percent, to $1.7 billion, from the period a year earlier, when the trading environment was unusually strong.

Investment banking income dropped 18 percent as a result of a slowdown in deal advising as well as a falloff in stock and bond underwriting fees. Trading revenue from its fixed income, commodities and currency group, which long buoyed the bank’s growth, dropped 29 percent. Trading revenue from equities decreased by 19 percent.

Citigroup’s consumer businesses were also hit hard. In North America, the domestic consumer business reported losses of about $5.4 billion in the quarter, a marked improvement from prior quarters, driven by the better performance of its portfolio of credit card and mortgage loans. But revenue was down 22 percent, largely reflecting a slowdown in new lending.

Meanwhile, the business faces intense pressure from rising costs, especially related to servicing troubled loans. Expenses climbed 9 percent in the quarter. And unlike JPMorgan Chase, Citigroup did not book a charge to reflect the higher operating costs to meet the new servicing requirements outlined in a regulatory enforcement order reached last week.

Although Citigroup sidestepped some of the foreclosure documentation problems that have dogged its competitors by making changes to the business during the early days of the recession, it did not entirely avoid them.

But John C. Gerspach, Citigroup’s chief accounting officer, suggested the bank’s swift response had muted the effect since many expenses had already been factored in.

“We have been hard at work improving our overall foreclosure process since 2009,” Mr. Gerspach said on the conference call. “Most of the improvements were in place by February 2010.”

Still, Citi officials expect quarterly operating costs for the mortgage business to rise $25 million to $35 million as it hires as many as 500 new employees to handle the increased volume of foreclosures. Mr. Gerspach also warned that the bank could book charges of $40 million to $50 million in each of the next few quarters.

Citigroup also faces a slew of legal claims from Fannie Mae, Freddie Mac and private investors who allege that the bank sold securities backed by faulty loans. Mr. Gerspach said Citi increased its reserves against those potential liabilities by about $122 million.

Overseas, the news was mixed. For several quarters, the bank’s consumer businesses in Asia and Latin America had been among the few bright spots. Loan losses eased faster in those regions than in the United States, and new lending had been picking up.

But during the first quarter, Citi’s results suggested a slowdown of growth all over the world. Revenue in Europe, Asia, and North America was down during the period; only in Latin America was quarterly revenue higher than it was in the period a year earlier.

Since the middle of 2009, Citigroup has broken out its results into two separate business segments. Citigroup Holdings, which contains the bulk of most troubled mortgage assets and other businesses earmarked for sale, as well as Citicorp, its ongoing operations.

Citi Holdings reported a loss of $608 million, a $278 million improvement from a year earlier, driven by considerably lower loan losses and other expenses. Citicorp posted a $4.1 billion gain, a decline of 20 percent from the $5.1 billion it reported in the period a year earlier.

This post has been revised to reflect the following correction:

Correction: April 18, 2011

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