Citigroup Pty Ltd, the principal operating entity of the American banking giant in Australia, has reported a slide in full year profit after almost no loan growth and a spike in operating costs.Financial accounts lodged with Australian regulators show that Citigroup recorded a net profit of A$157 million in the 12 months to the end of December - down 19 per cent on the 2017 result of $193 million.The lower result was underpinned by a 2 per cent rise in operating expenses and a 2 per cent dip in interest revenue.According to disclosures in the 2018 accounts, Citi's total loan base tapered by $12 million to $13.76 billion last year as the value of overall lending diminished.The decline in the size of the lending business is consistent with data published by APRA that also indicates a slight fall in lending in 2018.The bank, which trades in Australia under the Citi moniker, is facing challenges in its traditional core business of credit card issuance. Citi is the fifth largest credit card issuer in Australia behind the four major banks and accounts for about 12 per cent of the market. It's funded the Qantas credit card for a couple of years.According to APRA, the value of Citi's credit card lending fell by A$180 million in the 12 month period to $4.8 billion.However, the decline was mostly neutralised by a $150 million expansion of the mortgage book.While the stalling of overall loan growth at Citi was mirrored in other parts of the banking sector last year, several aspects of the company's financial performance set it apart from most other ADIs in the Australian market.The most notable is the extremely high levels of Tier One capital that Citi has been holding on its balance sheet for several years.At the end of December the company was sitting on contributed equity, reserves and retained earnings of more than $3.2 billion to support only  $10.7 billion of risk-weighted assets.That equates to a Tier One capital ratio of more than 30 per cent - easily the most conservative or inefficient in the Australian banking sector. It is roughly three times the regulatory capital that APRA normally requires deposit taking institutions to put aside.Banking Day last night sought comment from Citi on why it was holding so much regulatory capital but a spokesperson was not able to respond before this publication's deadline.The other curiosity evident in Citi's accounts was its highly successful pitch for deposits from Australian consumers last year that easily outpaced loan growth.Citi's retail deposit base expanded by almost $700 million or 12 per cent last year, while most of the country's leading retail banks grew at less than 3 per cent.This development has enabled Citi to rapidly reduce its reliance on wholesale sources of funding for its lending activities.One of the drivers of retail deposit growth appears to be a global currency account launched in 2018, which provides transaction capability in up to ten currencies.The bank disclosed that more than 7000 customers had opened the new