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Banca Monte dei Paschi di Siena (BMPS.MI) said Friday its second-quarter net profit tumbled on lower net interest income and lower commissions, but confirmed net interest income guidance for 2009 and revised cost cuts to between 4% and 5% from 3%.

The Siena-based bank said net profit for the quarter ended June 30 was EUR31.5 million, compared with EUR381 million in the corresponding quarter of 2008 and EUR301 million in the first three months of 2009.

The Italian lender said its Tier 1 ratio at the end of June was 5.8%.

Monte Paschi, like several other Italian banks such as Banco Popolare (BP.MI) and Banca Popolare di Milano, has asked for government-sponsored bonds to strengthen its capital ratios amid the economic crisis. In all, Italian banks have asked for up to EUR10 billion in government-sponsored bonds to strengthen capital ratios. The bank said its Tier 1 ratio would be 7.3% after taking the government sponsored bond.

At 0705 GMT, shares were up 2.7% at EUR1.58, outperforming a positive market.

Monte Paschi's net interest income in the second quarter fell to EUR987.5 million, down 10% from EUR1.098 billion a year earlier.

Income from its bancassurance operations in the second quarter was EUR341 million, and at the end of July it was EUR483 million, the bank said. Monte dei Paschi has a bancassurance joint venture with French giant AXA SA (AXA).

Earlier in August, the bank said it completed a EUR4.1 billion securitization of mortgages.

According to a slide presentation, Monte dei Paschi has to sell up to 135 branches mainly in Tuscani as part of an already announced asset sale plan.

Monte Paschi also said operating profit in the quarter fell to EUR183.4 million from EUR479.5 million a year earlier.

Company Web site: www.bmps.it

-By Sabrina Cohen, Dow Jones Newswires; +39 02 5821 9906; sabrina.cohen@dowjones.com