Analyst Note| Johann Scholtz, CFA |
No-moat BNP Paribas reported net attributable profit of EUR 1.6 billion for the fourth quarter of 2020, 14% lower than what it reported a year earlier but comfortably ahead of the EUR 1.2 billion expected by the consensus of analyst polled by BNP itself. The beat was however, solely the result of unexpected capital gains. BNP is guiding that it expects its credit-loss ratio to normalise to a midcycle level as early as 2021. It believes its midcycle credit-loss ratio is around 50-55 basis points, compared with the 66 basis points it provided for credit losses during 2020. Its revenue and cost guidance are less specific, save that BNP seems to believe revenue will increase in 2021 while costs should be stable. We maintain our EUR 49 per-share fair value estimate and our no moat rating. At current levels BNP is trading in 3-star territory but we do believe it remains an interesting option for yield-hungry investors.