Citigroup's boss says the market is the toughest in years

The world's biggest financial services company reported net profits for the three months to 30 June of $5.1bn (�2.9bn), or 97 cents per share.

Analysts had expected Citigroup to earn about $1.01 per share.

Its smaller rival, Bank of America, said its second-quarter net profit rose 12% to $4.3bn, boosted by growth in credit card fees.

Bleak outlook

Citigroup, in contrast, said credit card revenue in North America fell 3% as an increasing number of customers filed for bankruptcy ahead of planned changes to US bankruptcy laws.

Overall revenue fell 3% to $20.2bn, down from $20.8bn in second quarter of 2004. Citigroup said the current April-to-June period included charges for legal costs relating to the Worldcom and Enron corporate scandals.

Chief executive Charles Prince described the business environment as "one of the worst we have seen in years".

Citigroup's outlook contrasted with that of Bank of America, which reported a 7% increase in revenue to $14.2bn - topping analysts' forecasts for $14.04bn.

Bank of America has been aggressively expanding its consumer business in the US.