Germany’s Commerzbank said today that its net profit rose a better-than-expected 20% in the second quarter, helped by higher interest rates but dragged down by previously flagged problems at a Polish unit.

The bank raised its outlook for full-year net interest income.

It said it now expects €7.8 billion, up from previous expectations of around €7 billion, but cut its outlook for net commission income.

Commerzbank, one of Germany’s best-known banks and partially held by the government after a bailout more than a decade ago, is in the middle of a major overhaul, slashing its workforce and branch network to restore profits.

Like many banks, it is benefiting from a rise in interest rates and the income that generates, which was up 44% in the quarter from a year earlier.

Net profit of €565m in the quarter compares with a profit of €470m a year earlier. Analysts had on average expected profit of €538m, according to a consensus forecast published by Commerzbank.

The bank increased the provisions it sets aside for bad loans and related writedowns to €208m, up from €106m, but it said credit quality remained high.

Commerzbank took a €347m hit in the quarter from a provision it announced in June following a court ruling on how banks treat Swiss franc loans in Poland, where it has extensive operations with its mBank unit.