Citigroup's fixed-income trading business posted its strongest third-quarter performance in at least a decade, surpassing analyst expectations and helping push the bank's quarterly revenue to one of the highest levels in its history.

In an announcement on Tuesday, Citigroup (NYSE: C) said its bond, currency and commodities trading business generated $4.4 billion in revenue, above the analyst average estimate of $4.3 billion.

Meanwhile, its services business also stood out. That unit, which helps companies and governments move and manage money, saw revenue rise 15% year over year to $6.6 billion.

The outperformance in fixed income, currencies and commodities (FICC) trading, along with the services business, helped offset a weaker showing in merger advisory. Revenue from that business fell 4%, and bond underwriting revenue also declined.

Citigroup shares edged lower in premarket trading on Tuesday, down 0.4% as of 8:30 a.m. New York time.

With interest rates rising and merger activity slowing, investors are watching fixed-income trading closely to gauge whether this key industry profit engine is starting to lose momentum.

Citigroup's fixed-income business is the second-largest on Wall Street, making it especially important within the bank's overall markets operations, while other parts of the business have delivered mixed results.

So far, Citigroup appears to be handling market volatility better than some competitors. JPMorgan (NYSE: JPM) said earlier on Tuesday that third-quarter fixed-income trading revenue unexpectedly fell, its first decline in more than two years.

At Citigroup, results were mainly driven by growth in credit financing trading within the spread products division, while rates trading revenue declined.

Chief Executive Officer Jane Fraser has been pushing the New York-based bank to improve returns and has stressed to investors that after years of stagnant growth, Citigroup can lift revenue while keeping a tight lid on costs and narrow the gap with its Wall Street peers.

Citigroup shares have climbed 13% so far this year, outpacing every one of its major competitors.

Citigroup reported third-quarter earnings per share of $2.85, above the analyst average estimate of $2.65. Revenue rose about 8% to $23.8 billion, also above the average estimate of $23.7 billion.