Intesa Sanpaolo Third-Quarter 2020: Magic Shield to Safeguard Capital

No-moat Intesa Sanpaolo reported net income of EUR 3.8 billion for the third quarter of 2020. The result is however, materially inflated by the "negative goodwill" gain of EUR 3.2 billion that Intesa recorded on its purchase of a controlling stake in UBI. On a like-for-like basis Intesa saw its third-quarter 2020 net profit decline by 51% compared with the same period last year. The revenue weakness experienced in the second quarter continued--revenue declined by 10% year on year. Loan-loss provisions increased by 80% year on year to EUR 853m for the quarter. This is however, appreciably lower than the EUR 1.5 billion provisions that Intesa raised in second-quarter 2020. We maintain our EUR 2.10 per-share share fair value estimate and no moat rating.