Lehman Brothers' earnings jump

Investment bank Lehman Brothers Holdings Inc. on Tuesday posted a 39 percent rise in quarterly profit as revenue from equity underwriting and certain types of financing transactions remained strong despite higher interest rates.

Lehman said fiscal second-quarter net income rose to $609 million, or $2.01 per share, from $437 million, or $1.67 per share, a year earlier.

Analysts polled by Reuters Estimates forecast, on average, a profit of $1.90 per share.

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Investment banks' second-quarter profits in general are expected to rise from a year earlier but fall short of the numbers posted in the first quarter.

Rising interest rates have made it less attractive for companies to raise money from bond sales, while sales of equity have not been as strong as expected, analysts say.

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Lehman said in a release that a softening in the business of underwriting investment-grade debt was more than offset by an increase in leveraged finance and asset-backed transactions.

Lehman said second-quarter net revenue totaled $2.9 billion, up 28 percent from $2.3 billion a year earlier but down 7 percent from $3.1 billion in the first quarter.