Tight cost management and  lower impairment charges have helped Citigroup's Australian banking arm to regain earnings momentum.Financial accounts lodged with ASIC show that the local operations of the global banking group posted a net profit of $A201.7 million in the 12 months to the end of December.The result, which was also underpinned by higher fee income, was up 28.3 per cent or $44.5 million on the 2018 bottom line of $A157.2 million.Citi Australia appears to be the only domestic retail bank that continues to grow fee revenue as rivals cave in to public and regulatory pressure to remove or reduce transaction costs borne by customers.Citi boosted fee and commission income by more than $30 million to $404 million last year, which accounted for about 30 per cent of total revenue.However, it was the aggressive approach to cost management that did most to enhance the higher bottom line in the declining rate environment.While total staff costs were held flat, the bank reported a sharp improvement in credit quality with loan impairment costs falling more than $40 million to $138 million.The black spot on the bank's performance was a sharp decline in residential lending to owner occupiers.APRA data shows that Citi's book of owner occupier mortgages contracted by $520 million or 11 per cent between January and December last year.In a report on the 12 month performance attached to the financial accounts, chief executive Marc Luet indicated that the bank was poised to for growth."This business is set to capture a larger market share in the coming year," he said in the report.Luet also highlighted the bank's push into the instalment payment market as a likely driver of future growth.The rise of buy now pay later providers such as Zip and Afterpay presents an existential threat to Citi's large credit card business, which according to APRA grew total balances to $4.68 billion at the end of February.Citi is banking on a cash instalments payments product distributed through its credit card partners such as Coles, Qantas and Kogan to shield its cards business."Citi enables its white-label customers to use Citi's cash instalment plan simply, through the app, " said Luet in his report."Customers are able to turn any outstanding statement balances or large purchases into smaller, more manageable monthly repayments at a fixed rate over a set term."The bank's presence in the Australian credit card market could receive a further boost in the next few years as an exclusive card distribution deal with PayPal takes effect.Diner's Club - an often overlooked piece in Citi's local operations - last year outpointed competitive bids from rival card companies, including American Express, for several lucrative government card contracts.Diner's secured a whole of federal government card purchasing mandate and also won the contract to manage the NSW government's card program.