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* FY net loss 513 mln euros vs 6.6 bln in 2011
* Impairment charges hit 2.5 billion euros
* Non-performing loans ratio rises to 23.3 pct
* Loans-to-deposits ratio improves to 116 pct
By George Georgiopoulos
ATHENS, March 28 (Reuters) - Greece's second-largest lender Piraeus Bank posted a narrower loss in 2012, hurt by provisions for bad debt and higher funding costs due to the country's deep recession.
Greece's economy shrank 6.4 percent last year, leaving more than one in four Greeks without jobs, which pushed up loan impairments and forced banks to provision for credit losses.
Piraeus said it lost 513 million euros last year versus a loss of 6.6 billion in 2011, which included a big hit from a sovereign debt writedown.
Results were not directly comparable as the bank included acquisitions in its latest results.
Piraeus acquired the healthy part of ATEbank and French lender Societe Generale's Greek unit Geniki last year and bought the Greek branches of Cypriot lenders Bank of Cyprus, Cyprus Popular and Hellenic Bank earlier this week.
Piraeus, which is also in talks to buy Portuguese lender Millennium bcp's Greek unit, said impairment charges hit 2.5 billion euros last year as the economy slumped, of which 2.04 billion were loan-loss provisions.
It said loans past due for more than 90 days rose to 23.3 percent of its book at the end of December from 18 percent at the end of the third quarter, after incorporating ATEbank and Geniki.
The group improved its net loans-to-deposits ratio to 116 percent from 156 percent in 2011.
Apart from credit impairments, higher funding costs stemming in part from the bank's recourse to the Greek central bank's emergency liquidity funding mechanism (ELA) pressured net interest income, which fell 12.3 percent to 1.03 billion euros.
Greek banks resumed funding directly from the European Central Bank in December. ECB funding is about 2 percentage points cheaper than ELA funding. (Editing by David Holmes)