MADRID (AP) - Spanish financial group Banco Santander said Thursday its third-quarter profits plunged 26 percent and warned it won't meet its earnings target for the year due to new government-ordered provisioning norms.
The eurozone's largest bank by market capitalization said it made a profit of euro1.64 billion ($2.26 billion) in the July-September period compared with euro2.22 billion in same quarter of 2009. Revenue fell 5 percent to euro10 billion.
The bank said that under new central bank norms it had to set aside euro472 million in the third quarter to cover loan losses.
"As a result of this one-time provision, 2010 profit is expected to be below the estimate announced at the Annual General Meeting of shareholders in June of obtaining a profit in line with that of 2009," the bank said in a statement.
Net profit in 2009 rose 1 percent to euro8.94 billion.
Santander shares were down 0.6 percent at euro9.1 in morning trading in Madrid.
Strong profits from Santander's Latin American operations - particularly Brazil - helped ease the slide in earnings.
But the bank issued a gloomy forecast for economic growth in Europe, saying the continental economy "is losing steam in the second half of this year."
"In this context of low growth and greater uncertainty and no inflationary pressures, the interest rates of developed economies are at historic lows and no change is foreseen in the coming months," Santander said.
The bank said its UK operations kept up favorable trends.
Overall, the bank's net loan-loss provisions for the quarter were up 12.3 percent to euro2.94 billion from euro2.57 billion in same period in 2009.
Operating expenses for the quarter were up 14 percent to euro4.68 billion.
Net profit for the first nine months dipped by 9.8 percent to euro6.08 billion while gross income was up 7 percent.
The non-performing loan rate was 3.42 percent for the first nine months, up from 3.03 percent in 2009.