Citigroup's global wealth management revenue rose 41 per cent in the 2007 third quarter to $3.5 billion, driven by a 42 per cent increase in international revenue and a 24 per cent jump to record revenue at Smith Barney. The volume of assets under fee-based management also rose 41 per cent to $454 billion. But it was the one bright spot in the US bank's quarter as group net income declined 57 per cent from the prior-year quarter, from $5.5 billion to $2.38 billion, and following a record quarterly profit of $6.2 billion during the second quarter of this year. The results also included a $729 million pre-tax gain on the sale of Redecard shares, a Brazilian financial group. "This was a disappointing quarter, even in the context of the dislocations in the subprime mortgage and credit markets," said Citigroup chairman and chief executive officer Charles Prince. "A significant amount of our income decline was in our fixed income business, where we have a long track record of strong earnings, and this quarter's performance was well below our expectations. Although we generated strong momentum in many of our franchises, our fixed income results, along with higher credit costs in global consumer, led to significantly lower net income." Citigroup and rival Wall Street banks have seen their earnings ravaged by exposure to sub-prime mortgages. Citi's earnings momentum for the July-September quarter was also blunted by increased credit losses and trading setbacks. Citigroup revealed pre-tax losses of $1.56 billion from bets it made on mortgage-backed securities and other loan instruments, as well as disclosing pre-tax writedowns of $1.35 billion dollars related to mergers and acquisitions lending agreements. The financial giant also said it lost $636 million dollars, pre-tax, from its fixed income trading operations, partly because of the August meltdown in financial markets. The US credit and banking markets threatened to seize up in August as fears about the trillion-dollar mortgage market deepened, forcing banks to tighten their lending practices. "Importantly, many of our businesses performed well this quarter," said Mr Prince. "Our international franchise continued to expand rapidly, with revenues up 30 per cent. Our global wealth management franchise generated record revenues and transaction services posted another record quarter on double-digit earnings growth. In securities and banking, equity markets and underwriting revenues were up a combined 33 per cent, and our advisory revenues grew 29 per cent. Volumes in our consumer franchise continued to grow strongly with deposits up 18 per cent, managed loans up 13 per cent, and we opened 96 new branches around the world." "As we move into the fourth quarter, we are focusing closely on improving those areas where we performed below expectation, while at the same time continuing to execute on our strategic priorities," added Mr Prince.