FRANKFURT Germany's Commerzbank said on Wednesday that net profit nearly doubled in the first quarter, a better-than-expected result helped by higher interest rates.

Net profit of 580 million euros ($638.46 million) in the quarter compares with a profit of 298 million euros a year earlier. Analysts had on average expected profit of 481 million euros, according to a consensus forecast published by Commerzbank.

The bank said it sees "upside potential" in net interest income this year.

Commerzbank, one of Germany's best-known banks, is in the middle of a major overhaul, cutting thousands of workers and hundreds of branches to save on costs and lift profits.

Many banks reporting earnings for the first quarter have reported increases in revenue and profit on the back of higher interest rates.

Last year, Commerzbank booked a second consecutive year of profit, and the bank rejoined the prestigious DAX index of blue-chip companies.

It is still partially owned by the government following a bailout during the financial crisis more than a decade ago, and analysts have said that it is vulnerable to soaring inflation, a slower economy and potential soured loans.

"Commerzbank is in good shape. Our transformation is making good progress and is increasingly paying off," said Chief Executive Officer Manfred Knof.

($1 = 0.9084 euros)

(Reporting by Tom Sims and Frank Siebelt, Editing by Rachel More)