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NEW YORK CITY-Citigroup on Friday reported second-quarter net income of $4.3 billion, compared to a $2.2-billion loss during the same quarter in 2008. Much of the boost came from a one-time, after-tax gain of $6.7 billion on the sale of Smith Barney, which closed on June 1, but also reflected a strong showing from the institutional clients business.

“We remain optimistic that our turnaround of Citi will gain speed,” Citigroup CEO Vikram Pandit says in a release. “Our institutional business has a strong client franchise. Our most significant challenge now remains consumer credit. Losses in our consumer businesses have been growing for some time, but we see some positive signs of moderation in those loss trends. Sustainable profitability remains our primary goal.”

Friday’s earnings report was the first to reflect Citigroup’s split into two segments, Citicorp and Citi Holdings, which was announced in January. Citicorp, which includes Citigroup’s core holdings, generated $15 billion in revenues during Q2, down 11% year over year. Quarterly revenues for Citi Holdings, which is comprised primarily of non-core businesses that are candidates for eventual disposition, reached $15.8 billion, largely on the Smith Barney sale.

The Smith Barney sale to a joint venture with Morgan Stanley also contributed to a worldwide headcount reduction of 30,000 in Q2. The current worldwide employ base of 279,000 is about 96,000 smaller than at peak levels, according to Citigroup.

Citigroup on Friday also reported a 21% year-over-year reduction in expenses. As a component of its ongoing cost-cutting, Citigroup announced in late March that it plans to reduce its office space worldwide by about 10.5 million square feet by year’s end.

Locally, where Citigroup is the largest corporate tenant, the company is consolidating space at 399 Park Ave., its worldwide headquarters. It will take the form of cutting the executive floors from two to one and subleasing the remaining space. This is estimated to save $20 million over the life of the lease, according to Citigroup.

The company said in March that it would double the overall occupancy rate on the remaining floor at 399 Park–from 89 to 177–by creating smaller offices, increasing work station to office ratios and by utilizing “alternative work strategies.” Additionally, Citigroup plans to dispose of 371,625 square feet of office space at 250 West St.; 338,411 square feet at 333 W. 34th St.; 270,311 square feet at 787 Lexington Ave.; 176,030 square feet at 731 Lexington Ave.; 175,076 square feet at Citigroup Center; and 94,252 square feet at 77 Water St.

Earlier in the week, JPMorgan Chase reported Q2 net income of $2.7 billion, a year-over-year increase of 36%, on record quarterly revenues of $27.7 billion. Its earnings per share were reduced by its $25-billion repayment of TARP funds to the Treasury Department.

Along with Bank of America, Citigroup is the last of the major banks that have yet to repay TARP money. Its $27.5-billion stock swap with Treasury, which was postponed in April until the results of its stress test came in, is likely to occur next month.

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