* Business, household deposits rise 0.4 pct in Nov.
* Private sector credit shrinks 3.8 pct yr/yr
* Average real loan rate highest since Greece joined euro (Adds Nov. credit data, background)
ATHENS, Jan 3 (Reuters) - Greek bank deposits rose slightly in November after a five-month decline but private sector credit kept shrinking, central bank data showed on Friday, as deep recession saps demand for loans.
Hit by austerity and record unemployment, Greek households have been tapping savings to cope with economic hardship as banks struggle with growing amounts of non-performing loans.
The Bank of Greece expects the economy, about a quarter smaller after a six-year slump, to recover this year with national output expanding by 0.5 percent, and has said credit expansion will be crucial in fueling growth.
Data showed businesses and household deposits rose to 161.04 billion euros ($220 billion) from 160.38 billion euros in October, the rise mainly the result of interbank deposits.
Bank lending to the private sector shrank 3.8 percent year-on-year, the pace of contraction slowing slightly from 3.9 percent a month earlier.
Credit to the private sector has been in decline since mid-2011, aggravating the country’s worst postwar economic slump.
Falling deposits and tough capital requirements have weakened Greek banks’ capacity to provide fresh loans to businesses and households.
High borrowing costs have also dampened firms’ and citizens’ demand for credit as average real interest rates on new loans hit 7.5 percent in October, the highest level since Greece joined the euro and despite record-low ECB benchmark rates.
Loans to businesses, a narrower measure in the private sector overall figures, declined 4.7 percent after a 4.8 percent drop in October, the Bank of Greece said.
Lending to households and private non-profit institutions shrank 3.5 percent, unchanged from the previous month.
Greek banks lost around 90 billion euros or a third of their deposit base after the country plunged into a debt crisis in late 2009, partly due to capital flight on fears the country would have to quit the euro zone.
About 17 billion euros returned to the banking system in the months following a mid-June 2012 election, which led to the formation of a new government and eased fears that Athens would give up the single currency. (Reporting by George Georgiopoulos; editing by Harry Papachristou/Ruth Pitchford)