Struggling U.S. bank Citigroup Inc. enjoyed a return to profitability in the first quarter. The bank said Friday quarterly net income came in at US$1.6 billion.

Revenues were US$24.8 billion, up 99% from the same quarter last year, driven by strong results in the Institutional Clients Group, partially offset by net write-downs. Results also include US$7.3 billion in net credit losses and a US$2.7 billion net loan loss reserve build.

Despite the positive net income, the firm also reported an 18¢ loss per share due to the reset of the conversion price of the US$12.5 billion convertible preferred stock issued in a private offering in January 2008, and the cost of paying preferred stock dividends. The conversion reset did not have an impact on net income but resulted in a reduction to income available to common shareholders of US$1.3 billion ; and the preferred stock dividends, also did not impact net income, but also reduced income available to common shareholders by US$1.3 billion.

Operating expenses were down US$3.7 billion, or 23%, since the first quarter 2008. And, the Tier 1 capital ratio was approximately 11.8% versus 7.7% in the first quarter 2008.

“Our results this quarter reflect the strength of Citi’s franchise and we are pleased with our performance. With revenues of nearly US$25 billion and net income of US$1.6 billion, we had our best overall quarter since the second quarter of 2007,” said Vikram Pandit, CEO of Citi.

“As strong as our franchise is, we have been taking steps to strengthen it further,” Pandit added. “We have lowered risk and dramatically reduced the problem legacy assets that have caused many of our losses. We have meaningfully lowered expenses and headcount and improved efficiency. We have also increased our capital base.”

“While we and the industry face challenges in the coming quarters as we work through the weak economy, we will remain focused on strengthening the Citi franchise. We will continue to reduce our legacy risk, aggressively manage expenses and improve efficiency,” he pledged.