Shares of Citigroup fell sharply Friday despite the company reporting better-than-expected quarterly results.
In late-morning trading, the stock was down more than 7 percent.
The banking giant posted adjusted earnings per share of $1.06 and revenues of $18.64 billion for the previous quarter.
Analysts had expected Citigroup to report earnings of about $1.05 a share on $17.87 billion in revenue, according to a consensus estimate from Thomson Reuters.
"Overall, we had strong performance during 2015. The $17.1 billion we generated in net income was the highest since 2006, when our company was very different in terms of headcount, footprint, mix of businesses and assets," CEO Michael Corbat said in a release.
Nonetheless, the company's loans for the quarter fell 4 percent year over year. "In constant dollars, 5 percent growth in Citicorp loans was more than offset by continued declines in Citi Holdings, driven primarily by continued reductions in the North America mortgage portfolio and the sale of OneMain Financial, which was completed during the fourth quarter 2015," the company said.
"The operating earnings were all better than the consensus had expected," David Hilder, a banking analyst at Drexel Hamilton, told CNBC's "Squawk Box." "Citi's expenses as a percentage of revenue ... was down to 57 percent for the year, down from almost 65 percent for the year."
Citi's earnings report comes after a tough few months for the bank. Citigroup's stock is down about 7.48 percent year over year and down more than 12 percent since the start of 2016. In November, Citigroup's nonoperating holding companies were placed on a watch list by Standard & Poor's as the government indicated it would be less likely to help them in a future crisis.
Earlier this week, Citi settled long-running litigation in which Allied Irish Banks accused it of helping a rogue currency trader rack up a $691 million loss. Terms of the settlement were not disclosed, but the dismissal averts a trial over a fraud that was at the time one of the largest on record to involve unauthorized trades.
In its third quarter, the company beat earnings expectations, posting earnings per share of $1.31 compared to an expected $1.28. Revenue, however took a hit from legal fees, falling to $18.49 billion from $19.98 billion a year earlier.
The banking sector will continue to see flat earnings until the economy picks up, said Paul Miller, an analyst at FBR Capital Markets.
"With 2 percent GDP growth, you're not going to see a lot of top-line growth at [banking] institutions," Miller said. "That's why the guys are basically having flat earnings and ROEs (return on equities) ranging from eight to 12 to 13 percent."
— Reuters contributed to this report.
Correction: An earlier version misspelled Drexel.