Banco Santander said its full year profits fell by more than half after Spain's biggest lender marked down the value of billions in property loans and saw slowing business in its key Latin American markets.
Profit fell 59 percent to €2.205bn (£1.89bn; $2.99bn), the bank said in a statement published on its website. The Eurozone's biggest property lender said it set aside €18.8bn to cover losses on soured real estate loans.
The ratio of bad debts in its portfolio was 4.54 percent as of 31 December, slightly lower than the national average for Spanish lenders of 6.74 percent. Group revenues for the full year were €43.657bn
"Profits reached a turning point in 2012," said Santander Chairman Emilo Botin in the statement. "In 2013, with the exceptional write-offs behind us, we should see a marked increase in earnings, based on the group's recurrent revenues and cost control."
The bank's exposure to Spanish real estate was reduced to €12.5bn, the statement said, from around €24.9bn in 2011, after shifting more than 33,500 properties over the course of the year.
Its so-called core tier one capital ratio, a measure of the amount of capital the bank needs to set aside to protect savers and shareholders from potential losses, improved by 0.3 percent to 10.33 percent.
Profits from its operations in Latin America, which contribute around half of the bank's bottom line, fell by 8 percent to €4.305bn for the full year, Santander said. European profits were down 2 percent to €2.32bn while UK profits fell 4 percent to €1.175bn.
Santander shares fell nearly 3 percent in Madrid and were quoted at €6.215 each, a €0.185 decline from Wednesday's close.