NEW YORK (CNN/Money) - Citigroup said Monday that earnings jumped 14 percent in the second quarter, topping forecasts on Wall Street, and the nation's biggest financial services company also boosted its dividend 75 percent.

Citigroup said profits rose to $4.3 billion, or 83 cents per share, from $4.08 billion, or 78 cents per share, a year earlier, as consumer lending income rose 18 percent to $2.3 billion. The prior year's figures included $255 million, or 5 cents per share, for discontinued operations.

Shares of the New York-based banking group jumped 3 percent on the news on the New York Stock Exchange. Through Friday, Citigroup (C: up $0.98 to $47.13, Research, Estimates) shares had risen more than 30 percent this year, compared with a 13 percent rise in the Standard & Poor's banks index.

"Things you expected to work were working, things you expected to stay stable stayed stable," said Bob Maneri, an analyst at Victory Capital Management in Cleveland, whose $62 billion of assets include Citigroup shares.

Analysts polled by Reuters Research, a unit of Reuters Group Plc, on average expected a profit of 80 cents per share.

The rising profit comes as Chairman Sanford "Sandy" Weill tries to expand Citigroup's consumer base and retain its position as the world's biggest stock and bond underwriter.

Citigroup's earnings from continuing operations rose 12 percent, as revenue rose 8 percent to $19.4 billion.

Citigroup boosted its quarterly dividend to 35 cents per share from 20 cents, increasing its annual payout to shareholders by more than $3 billion. It also said it will de-emphasize share buybacks.

The dividend is payable Aug. 22 to shareholders of record as of Aug. 4. Citigroup boosted its dividend from 18 cents in January. Rival Bank of America Corp. (BAC: up $0.58 to $83.46, Research, Estimates) last month raised its dividend 25 percent, after President George W. Bush in May signed a law cutting the top tax rate on dividends to 15 percent.

"We are beginning to give shareholders a more meaningful part of our earnings in dividends," Weill said.

Citigroup also said it was shifting much of its equity-based compensation for employees to restricted stock from stock options. On July 9, Microsoft Corp. (MSFT: up $0.09 to $27.40, Research, Estimates), like Citigroup part of the Dow Jones Industrial Average, said it would stop awarding stock options to employees and instead issue direct stock grants that will be expensed.

Some analysts expect Citigroup to buy a U.S. bank. It bought Golden State Bancorp, one of the largest savings and loans, last year and European American Bank in 2001.

"I would expect an acquisition out of Citigroup in North America sooner rather than later," said Wayne Bopp, an analyst for Fifth Third Investment Advisors in Cincinnati, which invests $31 billion and owns Citigroup shares.

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Todd Thomson, Citigroup's chief financial officer, said Citigroup would like to continue to build its retail business and would keep looking to buy an asset manager.

The jump in consumer lending income included a 63 percent rise in retail banking income, to $1.05 billion. New mortgage volume doubled to $23.5 billion. Profit from credit cards rose 6 percent to $768 million, while consumer finance income fell 11 percent to $508 million.

Investment banking income rose 2 percent to $1.36 billion. Profit from non-U.S. operations rose 8 percent to $1.33 billion, though income in Japan fell 24 percent to $204 million. Assets rose 9 percent to $1.19 trillion.  

-- Reuters contributed to the story