(Adds Finansbank earnings, CEO comment, details)
* H1 net 344 million euros vs f'cast 125 million
* Provisions drop to 853 mln euros vs 1.2 bln
* Cuts Eurosystem borrowing 5.4 bln euros to 25.5 bln
* Profit in Turkish operations grows 30 pct
ATHENS, Aug 29 Greece's largest lender National Bank (NBG) remained profitable in the first half, helped by strong earnings from its Turkish unit Finansbank , lower funding costs and reduced provisions for bad debt.
The bank posted a net profit of 344 million euros ($458.9 million), above market expectations. Analysts polled by Reuters were expecting net earnings of 125 million euros on average.
NBG said Finansbank's profit grew 30 percent to 332 million euros year-on-year.
Credit impairments continue to impact Greek bank loan books with the economy mired in its sixth consecutive year of recession and unemployment at nearly 28 percent, forcing lenders to take provisions for losses.
NBG saw a slowdown in new non-performing loans, which led to a drop in provisions to 853 million euros from 1.2 billion in the first half of last year.
Loans past due by more than 90 days rose to 20.5 percent of NBG group's loan book from 19.8 percent in March.
The group's net interest income was helped by lower funding costs after reduced recourse to the Greek central bank's costly emergency liquidity facility (ELA).
Greek banks resumed funding directly from the European Central Bank (ECB) in December, when the country struck a new rescue deal with its international lenders. ECB funding is about 2 percentage points cheaper than ELA funding.
NBG said it reduced overall Eurosystem borrowing by 5.4 billion euros since the start of the year to 25.5 billion at end-June, with ELA funding standing below 1 billion euros.
National's bottom line was also helped by a 163 million euro write-back of provisions against government claims.
"Turkey added 180 million euros to the group's operating profitability in the second quarter and it's encouraging that activities in southeast Europe are returning to profitability," NBG CEO Alexandros Tourkolias said. (Reporting by George Georgiopoulos; Editing by David Holmes)