PRAGUE, Aug 3 (Reuters) - Czech lender Komercni Banka reported a 6% year-on-year drop in second-quarter net profit on Thursday, less than expected due to the release of loan provisions, but still feeling the impact of higher costs on deposits.

The country's third-biggest bank, majority owned by France's Societe Generale, posted a net profit of 4.53 billion crowns , above a Reuters poll forecast of 4.07 billion.

Czech banks like Komercni Banka have seen clients shift into longer-term deposits to grapple with high inflation. That is raising costs for banks, and Komercni Banka reiterated its outlook for a decline in net interest income in 2023 at a high-single-digit pace.

High interest rates, which had helped earnings last year, are also cutting into loan demand, and the bank forecast mid-single-digit growth for its lending in 2023.

Komercni Banka reported an 11.5% year-on-year fall in second-quarter net interest income.

Second-quarter profit was helped by the release of provisions for bad loans for a second straight quarter as non-performing loans stayed under control. Analysts had expected their further creation.

"The excellent quality of the loan portfolio even allowed for a release of provisions, which of course we must look upon as an exceptional situation," Komercni Banka Chief Executive Jan Juchelka said.

The bank forecast cost of risk in 2023 well below normalised levels, at 0-10 basis points.

The Czech economy has slowed sharply in the past year, going through a mild recession in the last half of 2022. Recovery is likely to be mild this year.

With inflation receding, markets are expecting a fall in interest rates from more than two-decade highs this year, although the central bank has not shown a willingness to quickly undo the tight policy of recent years.

($1 = 21.9240 Czech crowns) (Reporting by Jason Hovet Editing by Mark Potter)