Change in bad loans rules hits Santander

A €472m provision for bad loans has kyboshed Banco Santander's chances of hitting its full year earnings target.The Spanish banking giant said third quarter net profit declined to €1.64bn from €2.22bn a year earlier, partly as a result of the bad loans provision, which the company made following a recent change in Spain's provisioning rules."The bank has opted to apply the new Bank of Spain rules in a very conservative way and not to release provisions," the company said.Loan-loss provisions in the quarter rose to €2.94bn from €2.57bn in the third quarter of last year.Net profit in the first nine months of 2010 was down 9.8% from a year earlier to €6.08bn and missed market estimates of €6.42bn.Net interest income of €21.9bn was, however, in line with market expectations.The bank's UK operations continued to grow market share, the company said, while profit and revenues were both higher than in the third quarter of last year.Mortgage lending of £6.9bn in the third quarter took the total for the year to date to £19.2bn, with an estimated gross lending market share of around 19%.Bank account openings of 267,000 in the third quarter pushed the total for the year to date to 786,000, leaving the company on course to hit its target of opening more than 1m accounts for the second year in succession;Lending to small and medium sized enterprises was up 23% on a year ago.