Analyst Note| Johann Scholtz, CFA |
No-moat Credit Agricole reported pretax profits of EUR 712 million for the final quarter of 2020, but this was materially distorted by a EUR 903 million goodwill impairment charge. Excluding this impairment, pretax profit came to EUR 1.6 billion, in line with what the group reported for the fourth quarter of 2019. Revenue growth of 3%, supported by flat cost growth, led to a 9% increase in preprovision profits. The consensus of analysts polled by the company itself expected pretax profit of only EUR 1.1 billion for the quarter. Revenue came in 5% higher than expected, driving a 10% increase in preprovision profits. Loan-loss provisions for the quarter came to EUR 538 million, materially lower than the EUR 827 million provision analysts expected. We maintain our EUR 10 fair value estimate and no-moat rating.