October 11, 2016 / 3:17 PM / 10 months ago

UPDATE 1-Slovenia's banks perform better as economy improves

(Updates with profit figures, details, background)

LJUBLJANA, Oct 11 (Reuters) - Banks in Slovenia reported a sharp rise in their combined profits in the first eight months of this year, helped by an improving economy and a drop in bad loans, data from the central bank showed on Tuesday.

The sector has been recovering since Slovenia's banking system came close to collapse in 2013 and the government had to inject more than 3 billion euros to rescue mostly state-owned banks.

In the first eight months of this year the joint net profit of Slovenian banks, foreign and state-owned, jumped to 311 million euros ($348 mln), from 175 million in the same period of 2015.

Their bad loans fell to 2.2 billion euros in August, or 6.7 percent of all loans, from 7.3 percent a month earlier, the Bank of Slovenia said.

Foreign banks with Slovenian subsidiaries include Societe Generale, Sberbank, Unicredit and Intesa Sanpaolo.

Euro zone member Slovenia narrowly avoided seeking an international bailout in 2013 when its banks were on the brink but they have since benefited from an improving economy and cost cutting efforts.

The government raised its economic growth forecasts for 2016 and 2017 last month, to 2.3 percent and 2.9 percent respectively, citing stronger growth in exports.

Loans to households rose 2.2 percent in August from a year earlier, but loans to non-financial companies dropped by 11.2 percent compared with the same month of 2015, the central bank said.

Banks' combined balance sheet assets were down by 3.5 percent year-on-year in August. ($1 = 0.8928 euros) (Reporting by Marja Novak; Editing by Susan Fenton)

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