What happened

Citigroup (NYSE:C) was among the biggest losers in the financial sector when a panic about the health of the economy swept through the markets in late 2018, with the company's stock losing more than 20% of its value in the final two months of the year. But that late-year swoon set the stock up well for a recovery in 2019.

Shares of Citi were up 53.5% in 2019, according to data provided by S&P Global Market Intelligence, as fears of a downturn subsided and the bank made strides toward eliminating the perception that it was the most vulnerable of the large U.S. banks to make it out of the 2009 recession.

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So what

Citigroup has traditionally marched to a different drummer than its big-bank brethren, because it's more reliant than most on international operations, which represent nearly half of its deposit base. The company also took longer than most to shed the assets it quarantined during the financial crisis.

2019 was a year for the bank to play catch-up, but it was not an easy operating environment for bank stocks. The Federal Reserve reversed course on plans to raise interest rates midyear, eating into bank hopes for expanded net interest margins. A midyear inversion of the yield curve, which market watchers often see as a harbinger of a recession, temporarily sent investors in Citi and other financial institutions running for the exits. Concerns about tariffs and trade wars, which were especially worrisome to Citi because of its oversized international presence, also weighed on investor outlooks.

A banker shaking hands with customers from across his desk.

Image source: Getty Images.

But, overall, the worst of the fears never materialized, and Citi was able to generate earnings in the second half of the year that came in ahead of Wall Street expectations. The company's consumer banking division led the way, with branded card revenue up 11% year over year in the third quarter.

Now what

After a year like 2019, the obvious question is whether Citigroup shares can continue to outperform. In one sense, the shares are still relatively inexpensive, trading at 10.4 times earnings compared to JPMorgan Chase's 13.5 times multiple, Bank of America's 12.8 times multiple, and Wells Fargo & Co.'s 11.4 times multiple.

On the other hand, a lot of the cost-cutting and restructuring work that Citi did over the past few years to help fuel better results is now in the rearview mirror, and the company's large consumer credit card portfolio and international operation remain reasons for concerns. Citigroup has done a lot of good work to close the gap between it and its rivals, but it will be a challenge for the bank to continue to outperform the way it did in 2019.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.