SPANISH bank Santander says its net profit plunged almost 60 per cent in 2012 as it wrote off nearly 19 billion euros ($A24.94 billion) in dodgy loans and property assets.
However, the charges left Santander's balance sheet looking more secure.
Santander is the biggest bank in the Eurozone by market value.
The group said on Thursday it made 12.7 billion euros in provisions for non-performing loans and another 6.1 billion euros for Spanish real estate exposure - 18.8 billion euros in total.
A property market collapse in 2008 left Spain's banks awash with bad loans and destroyed millions of jobs.
The banking sector as a whole is expected to book more than 80 billion euros in new provisions on their 2012 accounts under a Spanish government drive to clean up their books.
The provisions in 2012 left Santander with 73 per cent of its bad loans covered, up from 61 per cent previously. They also allowed the bank to meet new Spanish legislation requiring better coverage of real estate exposure.
The bank said net profit dropped 59 per cent from the level the previous year to 2.2 billion euros ($A2.89 billion) in 2012, after declining by 35 per cent in 2011.
Without the huge charges, Santander said it would have boosted net profit by about 2 per cent to 23.6 billion euros.
"Profits reached a turning point in 2012," chairman Emilio Botin said in a 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," he said.
Net interest income in 2012 rose 3.6 per cent to 30.2 billion euros while gross income climbed 2.2 per cent to 43.7 billion euros.
Spain last year won agreement for a rescue loan of up to 100 billion euros from the Eurozone to finance a banking sector clean-up.
Four Spanish banks and a so-called bad bank that has taken over many risky loans have received 39.5 billion euros so far from the European Union credit.
Santander and another bank BBVA are among the few that have not asked for outside aid.
Santander said its doubtful loans rose to 4.54 per cent of total loans in 2012 from 3.89 per cent a year earlier.
In Spain, the bad loan ratio was higher - at 6.74 per cent compared to 5.49 per cent a year earlier - but well below the industry average, the bank emphasised.
Santander said the global spread of its business allowed it to resist the headwinds in Europe.
Latin America provided 50 per cent of its profits - Brazil alone 26 per cent - while Spain accounted for 15 per cent, Britain 13 per cent and the United States 10 per cent.
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