Citigroup’s net earnings for the first three months of the year have fallen to $3bn (£1.8bn), down 32% from a year ago.
The result was sapped by falling revenues, down 22%, with the firm’s investment bank hardest hit.
New lending remained weak, as the government-rescued bank struggled to shrink a balance sheet that was bloated during last decade’s credit boom.
But the US banking giant’s bad debt position improved during the quarter.
The $3.2bn it set aside to cover potential future losses on new lending was down 63% from a year earlier.
The bank was also confident enough to release $3.3bn from its reserves against existing questionable debts it owns.
That was in sharp contrast with rival Bank of America, whose first quarter results were hit by an unexpected rise in bad debts at its mortgage lending business.
“[The Citigroup results] show the healing process has begun, but it continues to be slow across the industry,” said Michael Holland of brokerage Holland & Co.
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Slow business hits Citi profits