Impairments and provisions rose 31% last year whereas net interest revenue was down 13% year-on-year, according to the Banka Slovenije Financial Stability Report.

Total assets have been contracting as lending, in particular to businesses, continued to drop, according to Tomaž Košak, the head of the central bank's financial stability department.

The decline in lending continued in the first months of 2013, as only housing loans registered a small uptick.

The unfavourable economic trends have had an impact on household behaviour, as household deposits dropped due to lower incomes and the Cyprus bailout.

"What is more important is that deposits are not expected to grow this year as employment and wages decline, which will be a drag on the banking system," added Vice-Governor Stanislava Zadravec Caprirolo.

In the corporate segment, delinquencies continued to increase, as 14.5% of all loans to companies are delinquent by more than 90 days.

Construction companies are the biggest problem, but delinquencies have also been increasing in trade and the hospitality industry.

"The long crisis has started to affect the segment of smaller companies and industries that are not typically cyclical," Košak said.

Delinquent loans are not evenly distributed across the banking system, as the share of non-performing loans is particularly high in big banks and significantly lower in foreign-owned banks.

"It is unwarranted to talk about problems of the entire banking system, this is focused on a particular segment of banks," according to Košak.

Governor Marko Kranjec said the figures were a result of the 20-year "neglect of ownership problems of companies and financial firms".

"We lived under the illusion that the credit system can preserve the national interest, but that is not possible," he said.