Santander: Q2 profit plunged by 92.8%

Santander, the biggest eurozone bank by capitalisation, said Thursday that its 2012 second quarter profit plunged by an annualised 92.8 percent owing to provisions ordered by Spanish regulators. The bank\'s net profit for the three months from April through June fell to 100 million euros ($121 million) a statement said. The figure came in way below market expectations, with analysts surveyed by Dow Jones Newswires having expected a net profit of 1.404 billion euros. The group blamed the surprisingly poor result on government-ordered provisions. Santander said it had held 6.504 billion euros in reserve to cover potential risks of insolvency, as required by regulatory authorities. An additional 2.780 billion euros were booked as a provision to cover \"Spanish real-estate risks,\" the bank said. Many Spanish banks have struggled since a property bubble burst in 2008, revealing core weaknesses within the financial sector. Madrid has secured secured an aid package of up to 100 billion euros from its eurozone partners for the banks, which are undergoing stress tests to determine their precise needs. Santander stressed that it would not need any of the eurozone aid. In the meantime, Madrid has ordered Spanish banks to clean up their balance sheets once and for all, to ease market pressure that has also driven the government\'s cost of borrowing to well over seven percent, the level at which other eurozone countries were forced to seek international financial aid. The total amount of new provisions expected to be taken by Spanish banks has been estimated at more than 80 billion euros. For the first half of 2012 meanwhile, Santander\'s net profit sank by 51 percent from the same period a year earlier to 1.704 billion euros. Net interest income for the six-month period stood at 15.499 billion euros.