Citigroup is lowering its fourth-quarter and full-year financial results after discovering fraud at a Mexican subsidiary.

The U.S.-based bank said Friday that it had extended $535 million in credit to Mexican oil services company Oceanografia SA de CV through its Banco Nacional de Mexico unit, also known as Banamex. Oceanografia has been a key supplier to Mexican state-owned oil company Petroleos Mexicanos.

Citigroup Inc. said it found out earlier this month that Oceanografia had been suspended from receiving new Mexican government contracts. Citi and Petroleos Mexicanos then reviewed their exposure to Oceanografia.

Petroleos said that it found fraud in the accounts receivables recorded by Banamex. Citigroup first detected irregularities in Banamex loans in the third quarter and had booked reserves for potential losses.

Citigroup says its 2013 net income will be reduced by $235 million to $13.7 billion from $13.9 billion. It believes the fraud is an isolated incident.

 Citigroup shares have fallen in recent weeks on concerns that slowing growth in emerging markets may reveal bad loans, as well as increase the risk of trading losses.

Citigroup's stock fell slightly in premarket trading.

With files from Reuters