July 12 (Reuters) - Citigroup's ( C/PN ) profit rose in the

second quarter, boosted by a 60% jump in investment banking

revenue and gains in its services division.

Net income climbed to $3.2 billion, or $1.52 per share, in

the three months ended June 30, the third largest U.S. lender

said on Friday. That compares with $2.9 billion, or $1.33 per

share, a year earlier.

The results come two days after U.S. regulators fined Citi

$136 million for making "insufficient progress" in fixing data

management problems identified in 2020. Regulators also required

the lender to demonstrate it was putting enough resources toward

those efforts.

Citi had already booked the penalties and additional

investments on the data work in the second quarter.

CEO Jane Fraser is carrying out a sweeping overhaul in an

effort to improve the bank's performance, cut costs and simplify

its sprawling businesses. As part of the turnaround, Citi aims

to shrink its workforce by 20,000 over the next two years.

Revenue in the second quarter came in at $20.1 billion, up

4% from a year earlier, buoyed by a $400 million gain from the

conversion and partial sale of Visa stock in May.

Citi now breaks out earnings individually for its five

businesses - services, markets, banking, U.S. personal banking

and wealth, which were previously housed under broader

divisions.

The new structure is part of Fraser's efforts to cut

bureaucracy and increase profits. Under it, the leaders of the

segments report directly to the CEO.

Investment banking fees jumped 60% in the second quarter to

$853 million. The surge comes as a prolonged industry-wide slump

in deals finally shows signs of a meaningful recovery.

Citi hired JPMorgan Chase ( JPM ) veteran Viswas Raghavan as head of

banking earlier this year. Fraser has expressed high hopes for

Raghavan, who is tasked with revitalizing the division catering

to multinational corporations.

Services revenue increased 3% to $4.7 billion. The unit

houses Citi's treasury and trade solutions business, which the

company touts as its crown jewel. The business had flat revenue

this quarter, at $3.4 billion. It processes $5 trillion of

payments a day for multinational corporations across 180

countries.

Fraser and other leaders highlighted their strategy for the

services business at an investor day held at the bank's New York

headquarters last month.

Operating expenses fell 2% to $13.4 billion, as the bank

saved money from the reorganization that simplified its

structure.

But the lower expenses were offset by the fines for failing

to comply with regulatory punishments known as consent orders

dating back to 2020, and investments for the remediation work.

Rival JPMorgan Chase ( JPM ) reported a rise in second

quarter profit on Friday, while Wells Fargo's ( WFC ) net income

declined and it missed estimates for interest income.

TURNAROUND IN FOCUS

Analysts have called 2024 a transitional year for Citi as it

becomes leaner under Fraser's turnaround.

Investors have also cheered the efforts and rewarded Fraser

with a 28% jump in the bank's stock this year, far outperforming

closest rivals JPMorgan Chase ( JPM ) and Bank of America ( BAC )

, as well as the broader equity markets.

Still, Citi has recently faced regulatory challenges tied to

its so-called living will, which details how it would be unwound

in the event of bankruptcy.

Citi is also working through two 2020 consent orders, in

which the U.S. Federal Reserve and the Office of the Comptroller

of the Currency directed it to fix longstanding and widespread

deficiencies in its risk management, data governance and

internal controls.