Net profit for the nine months to the end of September came in at 6.08 billion euros (£5.3bn), missing analysts' expectations of 6.42 billion euros. Net interest income came in at 21.896bn euros, in line with the average estimate in a Reuters poll.
The Bank of Spain has cut the time needed to fully provide for the estimated loss on non-performing loans. It has also required a further 10 per cent writedown on properties held for more than two years. The new rules came into effect on 30 September.
Santander estimated at the end of July the impact of the new regulations would be around 400m euros but the results showed it had put aside a greater-than-expected 472m euros under the new rules.
Shares closed on Wednesday at 9.18 euros, down 19 per cent from the beginning of the year. Hedge funds used Spanish banking shares as proxies for Spain earlier this year when investors fretted the country faced a Greek-style bail-out.
The bank has underperformed European peers .SX7P by around 16 percent since the beginning of the year.
Bad loans as a percentage of total loans at a group level rose to 3.42 per cent, from 3.37 per cent at the end of June.