Citigroup (NYSE: C) beat analysts' estimates by a thin margin for the first quarter of 2011, reporting 10 cents a share. But there's plenty of reason for concern. The profit mainly reflected the release of funds previously set aside to cover bad debts; the banks released $3.37 billion in the quarter.

The top line is certainly a cause for worry. Revenues came in at $19.7 billion, down 22 percent from a year ago and well below analysts' expectations of around $20.8 billion. Revenues were up 7 percent on a sequential basis.

Core operations continue to ail. Weakness was evident in overseas operations, except in Latin America. Domestically, the domestic consumer business reported losses of about $5.4 billion in the quarter, which is actually a big improvement, as credit card and mortgage losses were contained. But new business is still hard to come by and revenue in that arena plunged 22 percent.

Unfortunately, Citigroup did not get any sort of offsetting gain from investment banking, despite a strong deal environment. Investment banking income fell 18 percent. Trading revenue from its fixed income, commodities and currency group also fared poorly, falling nearly 30 percent.

So, the bank still has a long slog ahead of it. The fact that the Fed allowed it to boost dividends may be seen as a positive. It will be interesting to hear what the executives will say at the annual meeting.

For more:
- here's the release

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