NEW YORK (CNN/Money) - Citigroup Inc.'s fourth-quarter profit fell 37 percent, the company said Tuesday, as the No. 1 financial services firm set aside $1.55 billion to pay for lawsuits, loan losses and a settlement with securities regulators.

Looking ahead, Citigroup said it expects double-digit profit growth this year and will pay more of that profit to shareholders. The company raised its quarterly dividend.

For 2002, New York-based Citigroup earned a record $15.28 billion, affirming its position as one of the world's most profitable companies.

For the fourth quarter, Citigroup's net income fell to $2.42 billion, or 47 cents a share, from $3.87 billion, or 74 cents a share, in the year-ago quarter.

The results included a $1.3 billion after-tax charge for December's proposed $400 million settlement with state and federal regulators, who accused Citigroup and nine other firms of misleading investors by hyping stocks to win investment banking business.

The charge also covers payments for lawsuits over financing deals Citigroup arranged for bankrupt energy trader Enron Corp. In addition, Citigroup increased its loan loss reserves by $254 million, meaning that fourth-quarter profits were cut by $1.55 billion when all charges are combined.

Citigroup's lower fourth-quarter profit masked strength in its consumer banking division. Income in Citigroup's global consumer group, which includes credit cards and retail banking, rose 26 percent in the quarter to $2.37 billion.

During the quarter Citigroup completed the acquisition of Golden State Bancorp, which added 352 branches and $25 billion in deposits to Citigroup's retail banking franchise, primarily in California and Nevada.

But its corporate and investment bank posted a $344 million loss in the quarter, after the charge. This compared with a 2001 fourth-quarter profit of $905 million in this business.

Citigroup's fourth-quarter revenue was little changed at $18.9 billion.

The fourth-quarter profit of 47 cents a share topped the 46 cents a share forecast of analysts surveyed by earnings tracker First Call.

"It was right in line with our estimate," Lehman Brothers analyst Brock Vandervliet told Reuters. "The global corporate and investment bank wasn't quite as strong as we had hoped in terms of revenue and net income performance, but the consumer business was a bit stronger than what we'd been looking for."

Financial companies have cut tens of thousands of jobs to save money during a three-year stock market slump that has kept companies from going public and doing deals. And the shrinking size of assets under management reduced another source of fees.

"During 2002, our company faced several significant challenges," Sanford I. Weill, Citigroup's chairman and CEO, said in a statement.

Weill went on to list a weakening stock market and economy, and rising bankruptcies, which hurt the company's lending business. Like J.P. Morgan and Fleet, Citigroup lent to Argentina, which defaulted on its debt last year.

Weill also alluded to the probe into wrongdoing on Wall Street that brought charges that companies including Citigroup enabled the stock market bubble of the 1990s.

To help split its equity research from its investment banking and underwriting activities, Citigroup in October brought in Sallie Krawcheck, called "The Last Honest Analyst" by Fortune magazine.

"The many reforms we've instituted in areas such as research, IPO allocations, structured finance, and corporate governance only serve to strengthen our company," Weill said.

Looking ahead, the company said it expects double-digit percentage growth in earnings in 2003. First Call's forecast calls for earnings this year to rise about 11 percent to $3.28 a share.

Citigroup Tuesday also raised its quarterly dividend 11 percent, to 20 cents a share from 18 cents. The dividend is payable Feb. 28 to stockholders of record on Feb. 3, the company said.

Shares of Citigroup (C: down $0.66 to $36.14, Research, Estimates), which fell 30 percent in 2002, fell almost 2 percent in Tuesday trading.  

-- Reuters contributed to this report