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Lending to the non-banking sector shrank by 6.5% to EUR 30.75bn. Household loans were down 2.7% to EUR 8.6bn, while loans to the state increased by 43.9% to EUR 1.75bn as a result of treasury bond purchases.

The central bank attributes the drop in lending to businesses to the deteriorating creditworthiness of the real sector which is accompanied by a more cautious attitude of banks to lending.

The continuing economic crisis is reflected in a growing share of bad loans and, consequently, in the amount of impairments and provisions.

The total EUR 642m after-tax loss comes after a EUR 444m loss in 2011. The banking system has been in the red since 2010 and is not expected to break even this year.

Banks meanwhile did report higher gross revenues, which increased by 6.5% to EUR 1.55bn over 2011. Net interest revenue was down 12.9% to EUR 876.4m, while non-interest income was up 58.5% to EUR 670.5m.

The banks' combined total assets shrank by EUR 3.1bn or by 6.3% to just under EUR 46.7bn.