(Recasts with share price fall, details on provisions, quotes)
By Sarah White and Jesús Aguado
MADRID, Oct 31 (Reuters) - Spain's Banco Popular set aside twice as much in charges against bad debts in the third quarter than a year ago, a sign the bank is still dealing with fallout from the country's financial crisis.
Like most domestic peers, Popular has overcome the worst of Spain's 2008 property market crash that caused it huge losses two years ago. The bank on Friday also reported a rise of nearly 2 percent in nine-month net profit from a year ago, beating forecasts, while profit in the third quarter was nearly double that of a year ago.
But the pace of Popular's turnaround could lag that of local rivals, some analysts said, pointing to the bank's continued costly efforts to clean-up its balance sheet and its legacy of soured loans.
Popular's bad debts as a percentage of total credit fell to 13.85 at end-September from 13.97 percent at end-June, but that is still above the latest sector average of 13.2 percent in August.
The bank's shares were down 4.6 percent at 4.62 euros per share by 0940GMT.
"Fees fell, loan growth was negative on the quarter, trading income fell to more normalised levels, costs increased, (the) cost of risk remains high, and problematic asset trends are still worse than peers," RBC Capital Markets analyst Robert Noble said in a note to clients.
Popular's net interest income, or earnings on loans minus deposit costs, rose 6 percent to 630 million euros in the third quarter from a year ago and was up quarter-on-quarter.
That was boosted by its acquisition of Citi's retail business in Spain, however, which was integrated into earnings for July-September. Without that, some estimated net interest income would have fallen quarter-on-quarter when most rivals are achieving gains.
The bank, which passed a European Central Bank stress test more narrowly than most domestic rivals, said it was maintaining its 2014 earnings forecast for a net profit of around 325 million euros. (1 US dollar = 0.7966 euro) (Editing by Julien Toyer and Jane Merriman)