Bank of Cyprus net profit dips 2%

 — Proposes reduced dividend; provisioning costs rise —

Net profit at Bank of Cyprus fell 2% last year to 306 mln euros after a jump in loan provisions and is likely to be at a similar level in 2011, the bank said on Monday.
Group net interest income last year rose 23% to 1.04 bln euros.
The net profit is at the lower end of earlier bank guidance for between 300 mln and 400 mln in net gains. Pretax profit fell 5% to 348 mln euros.
Provisioning costs were up 51%, while the bank registered declines in foreign exchange income, its insurance divisions and in financial instruments, reflecting challenging conditions in markets.
The bank said it would propose a "reduced" final dividend of 0.03 euros per share in cash. The total of the proposed dividend, including a 0.06 euro per share interim payout in November, would total 73.5 mln euros, the bank said.
Central Bank governor Athanasios Orphanides recently recommended that Cypriot banks not pay dividends in a bid to further strengthen their capital adequacy levels.