By Inti Landauro and Matthieu Protard
PARIS (Reuters) - BNP Paribas, France's largest listed bank, reported forecast-beating second-quarter profits on Wednesday as higher revenues from its diversified international financial services unit offset sluggish fixed-income trading.
Net profit fell 0.1 percent to 2.39 billion euros ($2.8 billion) compared with 2.4 billion euros a year before. Four analysts polled by consultancy Inquiry Financial for Reuters had expected a median profit of 2.07 billion euros.
Overall, group revenue rose 2.5 percent year-on-year to 11.21 billion euros compared with a median forecast for revenues of around 10.9 billion euros.
"Good results, positive performance in markets and cost in retail, we expect the stock to outperform the sector," wrote analysts at brokerage Jefferies.
Last month major Wall Street banks such as Goldman Sachs and Morgan Stanley reported higher profits, although Deutsche Bank last week reported a drop in quarterly earnings.
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A surge in the various businesses housed in BNP's international financial services arm, including consumer lending, insurance and its U.S. bank BancWest, allowed the company to recover from a weak first quarter when net profit plunged to 1.57 billion euros.
Plummeting revenue from fixed-income trading impacted results in the January-March period. That trend continued in the second quarter, with revenue from corporate and investment banking falling 6.8 percent.
The bank attributed the weakness in fixed-income trading to certain factors in the European market, such as persistently low interest rates. The corporate and investment banking division was also hit by a weaker dollar.
But while that negative trend continued, BNP Paribas found other sources of profit elsewhere.
"Revenue driven by the specialized businesses increased in the context of economic growth in Europe, despite an unfavourable exchange effect and less favourable financial markets than in the second quarter of 2017," BNP Paribas' Chief Executive Jean-Laurent Bonnafe said in a statement.
While low interest rates have hit parts of its investment banking business, they have conversely buoyed other businesses such as consumer lending and life insurance.
Solid economic growth in the United States also lifted BancWest's profits. Revenue from the U.S. bank rose 22 percent in U.S. dollar terms, or 12 percent when translated into euros.
The strong performance at the international financial services arm also mitigated weakness in BNP Paribas' French retail bank, where revenues fell during the quarter.
($1 = 0.8550 euros)
(Reporting by Inti Landauro; Editing by Sudip Kar-Gupta and Jan Harvey)