Banco Santander’s net profit fell 14 per cent in the third quarter after being hit by one-off restructuring costs largely related to the acquisition and integration of the rescued lender Banco Popular.

The eurozone’s biggest lender by market value – which consolidated Banco Popular into its accounts for the entire third quarter after taking over the troubled lender in June – reported a net profit of €1.46 billion.

Analysts, who on an average had forecast a net profit of €1.85 billion, had expected the lender to begin booking costs related to Popular in the last quarter of 2017.

Santander has said it expects total restructuring costs of around €1.3 billion related to the Banco Popular deal. In the third quarter, the absorption of the lender hit Santander’s net profit by €122 million.

Santander took over Popular for a nominal €1 after European authorities stepped in to avert a collapse of the lender following a run on the bank.

Excluding extraordinary charges, Santander’s underlying net profit rose 17 per cent, boosted by its main market, Brazil.

As with its recent positive strategy update – when it slightly lifted its 2018 profitability targets – the bank’s quarterly results are expected to be partially overshadowed by Catalonia’s independence drive.

Santander’s net interest income – a measure of earnings on loans minus deposit costs – was €8.7 billion in the quarter, up 11.3 per cent from last year but up just 0.9 per cent against the previous quarter.

Like European rivals, Santander is struggling to lift earnings from loans in Spain as interest rates hover at historic lows and rising competition erodes margins.

Investors are expected to focus on management comments regarding Santander’s business in Catalonia, which accounts for around 13 per cent of its market share in Spain.

In an attempt to calm deposit holders following a banned October 1 vote for independence in the region, Caixabank and Banco Sabadell, the most exposed to Catalonia, moved their legal headquarters out of the region.

Banco Santander ended September with a core tier-one fully loaded ratio of 10.80 per cent, compared to 10.72 per cent in July after including the €7 billion capital increase for the acquisition of Popular.