UPDATE 1-Bank of Cyprus Q1 falls on state levy, provisions

* Tax levy eats into Q1 gains

* Bank maintains guidance for full year (Adds detail)

NICOSIA, May 23 (Reuters) - Cypriot lender Bank of Cyprus BOC.CYBOCr.AT posted a 13 percent drop in first quarter net profit as it jacked up provisioning costs and paid a new levy to the cash-strapped government.

The bank, Cyprus’s largest, repeated expectations that net profit for the full year would be similar to 2010’s 306 million euros.

First quarter net profit was 71 million euros. Provisions rose 7 percent while tax in Cyprus rose 150 percent following a 5 million euro payment to the government.

Cyprus imposed a 0.095 percent tax on deposits of banking institutions this year. Part of the proceeds will go to a bank stability fund with the rest going to the state, struggling to keep a lid on a rising public deficit.

Pre-tax profit was up 2 percent to 93 million euros, the bank said. Net interest income rose 14 percent to 276 million euros.

The bank concluded a capital building issue last week. Bank of Cyprus said on Friday it had received subscriptions worth around 890 million euros for an enhanced CoCos issue.

The issue raised the Bank’s pro forma total capital adequacy ratio to 12.3 percent, and its Tier 1 ratio to 11.9 percent, it said.

Writing by Michele Kambas, editing by David Cowell