Doral Financial Q2 loss narrows

(Reuters) - Doral Financial Corp (DRL.N) reported a significantly narrower loss for the second quarter, helped by a rise in interest income and a fall in provision for bad loans, sending its shares up as much as 20 percent.

The Puerto Rican lender posted a loss attributable to common shareholders of $6.7 million, or 12 cents a share, compared with a loss of $45.8 million, or $8.49 a share, last year.

Analysts on average had expected a loss of 20 cents a share, before special items, according to Reuters Estimates.

Net interest income rose 41 percent to $48.9 million.

The provision for loan and lease losses fell about 44 percent to $10.7 million from a year ago, when the company's bad-loan provision rose by $8.8 million as it transferred $1.3 billion of loans from the loans held for sale portfolio to the loans receivable portfolio.

The jump in interest income was driven in part by a $6.8 million reduction in deposits costs and general decline in interest rates, the company said in a statement.

Shares of the company, which touched a high of $16.70 earlier in the day, were trading up $2.23 at $16.17 Friday morning on the New York Stock Exchange.

(Reporting by Adheesha Sarkar in Bangalore; Editing by Amitha Rajan)