UPDATE 1-Kazakh Alliance Bank net income halves in first qtr

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ALMATY, June 25 (Reuters) - Kazakhstan's Alliance Bank (ALLBq.L) ASBN.KZ said on Wednesday its first-quarter net profit nearly halved due to increased provisions for loan losses.

Alliance, Kazakhstan's fourth-largest bank, has suffered from the global liquidity squeeze due to its heavy reliance on foreign borrowing and rapid credit expansion.

The bank's net profit fell to $35 million in the first quarter from $66.5 million in the same period of 2007.

"The net profit decreased mainly due to the increase of provisioning as well as revaluation of foreign exchange operations," Alliance said in a statement.

Alliance's loan book shrank 6 percent, with retail loans -- the focus of its operations -- declining by 9.7 percent.

Alliance said earlier it expected full-year 2008 profit to shrink to $300 million from $348 million in 2007. (Writing by Olzhas Auyezov; Editing by David Holmes)