Net profit jumped 31 percent thanks to lower loan provisions and strong retail banking, offsetting volatile financial market conditions that hit investment banking, BNP said.
The performance underlined an improving but still challenging macroeconomic environment in BNP's key euro zone markets, pointing the way to more growth in retail, Chief Executive Baudouin Prot said in a statement.
Globally the outlook for retail banking is positive with significant potential for market share gains, Prot said, though he added that provisions in Italy could buck the trend and rise.
BNP shares were up 3.8 percent at 54.69 euros at 3:24 a.m. ET. Smaller rivals Societe Generale
BNP Paribas is presenting results that are still very solid, which will undoubtedly be among the three best in Europe this quarter, CM-CIC Securities analyst Pierre Chedeville said in a note.
Resurgent investor confidence following the stress tests has brought down BNP's credit spreads and signals an improving environment for the third quarter, Prot told CNBC TV. BNP's core Tier 1 ratio was 8.4 percent, up from 8 percent at end-2009.
Investor confidence has also been boosted by a recent watering down of proposed capital requirements from the Basel banking committee.
A more benign risk environment since the depths of the financial crisis halved BNP's second-quarter provisions to 1.1 billion euros ($1.4 billion), the lowest level in two years, with provision write-backs exceeding new provisions at BNP's corporate and investment banking division.
Still, the unit suffered a 30 percent fall in second-quarter revenue because of a slump in capital markets activity that has also weighed on results at Goldman Sachs
Equity advisory revenue -- a key area of analyst concern and an important business line for rival SocGen -- fell 60 percent.
Retail banking had a strong quarter thanks to rising loan demand and deposit growth, BNP said. Lower-than-average household debt levels in France have kept up growth in retail banking across the sector, analysts say, though there are concerns government austerity could brake activity.
Group net profit rose 31 percent year-on-year to 2.1 billion euros, the bank said, compared with the average forecast in a Reuters poll of 12 analysts of 1.7 billion. Analysts on average expected provisions of 1.5 billion.
BNP's acquisition of assets from crippled Benelux bank Fortis at the peak of the crisis has delivered 402 million euros of synergies so far out of an expected total of 900 million through 2012, the bank added.
The Fortis deal was seen as a success for Prot, a former civil servant who has led BNP since 2003 and burnished its image following the financial crisis.
BNP's Belgian and Luxembourg retail revenue rose 7 percent. Southern and Eastern Europe units, and U.S. division BancWest, stayed profitable after stemming losses earlier in 2010.
Commenting on recent choppy conditions for bank funding, BNP said there had been obvious tension in May but that short-term financing was now very abundant.
Credit market jitters had been part of the motivation behind stress testing Europe's banks, amid concerns they may be undercapitalized following the crisis.
BNP Chief Financial Officer Philippe Bordenave, a black belt in judo, has helped the bank defy market fears and secure nearly three-quarters of 2010 funding by mid-year. BNP issued 1 billion euros in unsecured debt during the quarter.
(Editing by James Regan)