A big turnaround in its mortgage business was one of the highlights for Citibank in Australia in 2011. Citi's local retail arm (Citigroup Pty Ltd) yesterday released its results for the year to December, which included a 22 per cent increase in net profit.The bank made a net profit of A$318 million - up from $261 million in 2010. It achieved this growth despite a 31 per cent increase in bad and doubtful debt expenses. Citibank Australia chief executive Roy Gori said the higher bad debt charge was not the result of deteriorating credit quality. Citibank Australia revised its provisioning methodology to bring it into line with the way the group manages provisions in other markets."Credit performance has been good but we are taking a cautious view of the future," Gori said.Delinquencies (past due 30 days or more) rose from 2.9 to 2.99 per cent (this percentage is an average of the mortgage and credit card books).Net interest income rose from $7695 million in 2010 to $863 million last year, and income from fees and commissions rose from $240 million to $259 million.The bank settled $1.4 billion of mortgages in 2011 compared with $500 million in 2010. Gori said the mortgage book grew by three per cent last year, although Australian Prudential Regulation Authority figures show a decline of 0.5 per cent.The turnaround came from aggressive pricing of fixed-rate loans (which made up 30 per cent of Citibank's mortgage sales) and investment in marketing and distribution.The bank made 20 per cent of its mortgage sales through direct distribution channels compared with only five per cent the year before.Another area where it performed well was in transaction accounts. Last year it launched a fee-free account called CitibankPlus, which had some attractive international banking features. Gori said transaction account openings tripled.The investment in distribution will continue this year. The bank is working with its ATM partners to increase the number of ATMs its customers can access from 175 to 275.Deposits were flat at $6.8 billion.