Citigroup Inc reported higher third-quarter earnings on Monday as the bank set aside less money to cover bad loans and recorded an accounting gain banks can take in turbulent markets. Investment banking fees dropped as the European debt crisis cut into stock and bond issuance and merger activity. Operating expenses rose,in part because of investments the bank is making to boost its business. Citigroup,the third-largest US bank by assets,reported net income of $3.77 billion,or $1.23 per share,up from $2.17 billion,or 72 cents per share,in the same quarter last year. The third-quarter results included a pre-tax gain of $1.9 billion,or 39 cents per share after taxes,due to the banks widening credit spreads during the quarter. When a banks debt weakens relative to US Treasuries,it can record an accounting gain because it could profit from buying back debt. Excluding that gain,Citi earned $2.6 billion,or 84 cents per share.
