February 1, 2017 / 9:32 AM / 3 years ago

UPDATE 2-Egypt's CIB to cut cash dividend after hit from weaker pound

* Proposes cash dividend of 0.5 pounds vs 0.75 last year

* 2016 net income up 27 pct to 6 billion pounds

* Slide in pound his capital reserves (Adds analyst quote, details)

By Asma Alsharif and Nadine Awadalla

CAIRO, Feb 1 (Reuters) - Egypt’s Commercial International Bank (CIB) plans to cut its cash dividend by a third, it said on Wednesday, after a plunge in the country’s currency hit its capital reserves.

CIB reported a 27 percent rise in 2016 net income to 6 billion Egyptian pounds ($319 million), including a 35 percent increase in the fourth quarter as it benefited from rising trading income and lower provisions.

But it said the sudden flotation of the pound on Nov. 3, which led to a plunge in the currency and a rise interest rates, had seen the value of its assets and commitments in foreign currencies fall by 325 million pounds.

“This (drop) was significant for CIB, but it was less significant than the (falls) incurred by other banks,” said Abu Bakr Emam, head of research at Prime Securities.

CIB said its board had recommended a cash dividend of 0.5 pounds per share, down from 0.75 pounds last year.

It also said its capital adequacy ratio (CAR) had declined to 10.7 percent in the fourth quarter, just above the central bank’s requirement of 10.6 percent.

Prime Securities’ Emam said cutting the dividend and retaining more earnings could help to bolster capital reserves.

CIB also said it planned to take out a Tier 2 capital loan of up to $300 million.

Egypt has faced a foreign currency shortage since a popular uprising in 2011 drove away its key sources of foreign currency: tourists and foreign investors.

$1 = 18.7800 Egyptian pounds Editing by Louise Heavens and Mark Potter

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