Citigroup's second-quarter earnings were a "disappointment," as higher expenses offset a better-than-expected rise in revenue, David Trone, the securities industry analyst at JMP Securities, told CNBC Friday.
Citi reported second-quarter net income that beat analyst expectations, rising 22 percent to $3.3 billion on lower bad-loan costs.
According to Trone, if you look at the headlines "it looked like a big beat, but once you got into the detail we saw that the revenue beat us by 5 percent but unfortunately the expenses were up 8 percent. So they have an issue there that offset on a quarterly basis."
Banks typically try to keep their costs controlled at a time of relatively stagnant revenue, but Citi's efficiency ratio actually deteriorated, Trone said. "Generally you like to see some operating leverage. It was a little bit of a disappointment," he said.
If there is a bright spot it is Citi's international business, particularly in Asia, which Trone called a "big bright spot in their franchise."