Citigroup Inc., (C) the nation's largest financial institution, on Friday said its profit rose 30 percent in the fourth quarter, largely on strength in its international operations and a gain on the sale of its asset management business.

New York-based Citigroup also increased its quarterly dividend to 49 cents a share from 44 cents.

Citigroup said net income totaled $6.93 billion, or $1.37 per share, in the October-December period, up from $5.32 billion, or $1.02 a share, a year earlier.

Excluding the $2.1 billion gain on the sale of its asset management business, however, net income fell about 3 percent from the year-earlier quarter to $4.97 billion and earnings per share were flat at 98 cents.

Revenue totaled $20.78 billion for the latest quarter, up 3 percent from $20.1 billion a year earlier.

The results appeared weaker than analysts expected. Wall Street expectations were for profits of $1 a share on revenue of $21.6 billion, according to a survey by Thomson Financial.

Charles Prince, chief executive officer, said in a statement accompanying the report that strength in the bank's international business was partially offset by "a challenging interest rate environment and competitive pricing conditions globally."

In fact, Citigroup blamed "net interest margin compression" for a decline in revenue in its U.S. card division and little growth in its domestic retail distribution results.

Net interest margin is the different between what banks pay to borrow money and what they can earn when they lend it. As short-term interest rates have risen and long-term rates have held relatively stable, the spread has narrowed, cutting into profits. Earlier this week, Wells Fargo & Co., the nation's fifth largest bank, and several other institutions missed earnings projections because of margin squeezes.

Revenues in the bank's global consumer unit, the most sensitive to interest rates, fell 3 percent to $11.8 billion in the fourth quarter. But revenues were up in corporate and investment banking as well as in global wealth management.

Revenues were especially strong overseas, with Citigroup international operations posting a 13 percent gain to nearly $9 billion.

Citigroup's in December completed the sale of its asset-management business to Baltimore-based Legg Mason Inc. and took on Legg Mason's broker-dealer unit, adding some 1,500 brokers to Citigroup's Smith Barney unit. Citigroup said at the time it would log an after-tax gain of $2.1 billion from the transaction.

For the year, net income totaled $24.6 billion, up 44 percent from $17.05 billion in 2004. Revenues were $83.6 billion, up 5 percent from $79.6 billion in 2004.

Citigroup's dividend will be payable Feb. 24 to shareholders of record from Feb. 6.