video transcript

The bright newly renovated branches at Citigroup reflect a sort of new beginning for the bank, which just reported better-than-expected quarterly earnings. The third largest bank cut expenses, a chunk of which had been used to upgrade those branches, a move that is paying off with consumers. Erik Oja of S&P Capital IQ: SOUNDBITE: ERIK OJA, EQUITY BANK ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "The facelift has been very expensive but it's absolutely necessary because they compete against JP Morgan Chase, TD Bank and a lot of banks which have spent a lot of money making attractive branches as well as improved technological offerings such as state of the art ATM machines and links with the iPhone and iPad." Oja just raised his estimate from Hold to Buy- and thinks now that Citi's got those expenses behind them - results will continue to improve. Citi was also able to release $1.2 billion that it was keeping in bad-loan reserves- because delinquency rates for the company's North American credit card and retail banking customers plummeted 31 percent. There was also loan growth in the core Citicorp division, and strength in their fixed income business. They are also benefitting from an overall improving economy - like their competitors JP Morgan Chase and Wells Fargo, which reported results last week. But risks remain: SOUNDBITE: ERIK OJA, EQUITY BANK ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "They are very dependent on consumer loan growth and if the consumer doesn't start spending or borrowing that would be a key risk for Citigroup and then of course what is going on in Europe that is another key risk and then finally the Chinese economy that has entered a bit of a slowdown and that is a further risk for Citigroup." Also Citigroup is still battling image issues and other challenges brought on by the financial crisis. It was one of only four banks to fail the Federal Reserve's latest stress tests. Bobbi Rebell, Reuters.