* Eurobank posts loss of 94 mln euros in Q1
* Non-performing credit reaches 34 pct of loan book
* Continues provisioning for bad debt (Adds details, CEO comment)
By George Georgiopoulos
ATHENS, May 14 (Reuters) - Greek lender Eurobank narrowed its loss in the first quarter but provisions for impaired credit continued to weigh on its bottom line as the economy dipped back into recession.
Kicking off the earnings reporting season for Greek banks, the country's third-largest lender by assets posted a net loss of 94 million euros ($107 million) from a 524-million euro loss in the fourth quarter.
Eurobank, which is 35.4 percent owned by Greece's HFSF bank rescue fund and 13.6 percent by Canada's Fairfax, said credit loss provisions fell to 303 million euros in January-to-March, down 59.2 percent from the previous quarter.
The group, with operations in the Balkans including Romania and Bulgaria, continued to provision for bad credit to strengthen its balance sheet and increase the cash coverage of non-performing loans.
"The negative trends in a number of ratios, such as the deterioration in loans-to-deposits and the increase in loans past due over 90 days, are attributable solely to the external environment that prevailed in the first quarter," Chief Executive Fokion Karavias said.
Eurobank and Greece's other big lenders suffered deposit outflows during the new leftist government's standoff with its EU/IMF lenders over a cash-for-reforms deal, becoming dependent on emergency liquidity from the country's central bank.
This financing is costlier than direct funding from the European Central Bank (ECB) and eats into their net interest margins. Eurobank's net interest income dropped 5.4 percent from the previous quarter to 373 million euros.
Greek banks are still troubled by large problem loan portfolios after a deep recession which pushed unemployment to record highs. They continue to make provisions as joblessness has made it hard for borrowers to service their debts.
Eurobank's non-performing credit -- loans in arrears for more than 90 days -- rose to 34 percent of its loan book at end-March from 33.4 percent in the last quarter of 2014.
Its deposits fell by 5.9 billion euros in the first quarter to 34.9 billion after outflows mainly in the first two months of the year. Central bank funding more than doubled to 29.1 billion euros, also due lost access to the interbank market. (Reporting by George Georgiopoulos, editing by Deepa Babington)