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Another round of earnings reports is fast approaching. This season will be particularly interesting, as an inverted yield curve has recently fueled fears over an imminent economic slowdown and reintroduced volatility in the stock market.

Particularly interesting to observe will be the financial services sector. The space is one of the most sensitive to interest rate dynamics and the overall health of the economy. The large banks will begin to share their financial results and offer their outlook for the remainder of the year in a few weeks. Among them, Citigroup (C) - Get Citigroup Inc. Report , which is scheduled to report first-quarter earnings on April 15, deserves special attention.

The New York City-based financial institution is one of the largest U.S. providers of financial services to retail clients, managing a loan portfolio worth nearly $170 billion in credit card products alone. Citigroup is particularly active outside North America, where nearly 40% of the bank's consumer group net revenues were generated last year. The company's management team, therefore, may have a thing or two to say about the state of the global retail banking sector.

Asset growth results and expectations will certainly be an interesting topic of discussion. Citigroup has done a good job of expanding its loan and deposits portfolio as of late, at a mid-to-high single digit percentage pace in the most recent quarter. But as CEO Mike Corbat stated during Citi's January earnings call, the bank is "prepared to make adjustments if it gets the sense economic conditions are changing." Such measures could include a more cautious loan growth strategy that favors quality over quantity.

Also on the watch list are margins trends. Here, a few moving pieces will need to be assessed independently. Spreads should have an impact on net interest margin, a reflection of the interest rate environment that has been gaining media attention as of late. The debate around this subject and projections for future quarters will likely be more relevant than the actual results in the first quarter.

At a more company-specific level, Citigroup's push to improve overhead efficiency should affect the bottom line positively, while changes in credit provisions will be an item worth paying attention to.

Lastly, it will be interesting to observe the evolution of credit metrics to assess the health of the bank's loan book. To be fair, credit quality should be one of the last pieces of the puzzle to reflect a potential deterioration in macro factors, including a slowing economy or softness in the job market. And lately, Citigroup has been reporting stability in credit metrics.

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But with leverage in the U.S. private sector having reached a seven-year high last year, keeping track of consumers' ability to repay their debt seems like a sensible thing to do.

Is Citigroup a Buy Ahead Of Earnings?

Citigroup stock has been a poor performer in the "super-sized" U.S. banking space over the past 12 months, dipping the most during the fourth quarter correction and edging only its troubled peer Wells Fargo (WFC) - Get Wells Fargo & Company Report  since March 2018. Therefore, investing in it at current levels comes with the benefit of de-risked valuations. 

Citigroup's current-year P/E sits low at 8.1x, while its direct competitors' average multiple currently hovers around 10x. The picture is not much different when using other valuation metrics, including price to tangible book, in the analysis.

But considering the macro-level uncertainties, coupled with the fact that the financial services sector tends to be highly pro-cyclical, a focus on quality at this moment might make the most sense. To that end, JPMorgan (JPM) - Get JP Morgan Chase & Co. Reportseems like a better choice in the space, given the higher return on equity, enticing earnings growth prospects and the robustness of the bank's balance sheet.

By contrast, Citigroup may be more of a speculative play, bound to face the most headwinds in a potential economic downturn.

Citigroup and JPMorgan are holdings in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.

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The author has no positions in any stocks mentioned in this article.