updated 12/15/2004 9:36:42 AM ET 2004-12-15T14:36:42

Lehman Brothers Holdings Inc. on Wednesday said fourth-quarter earnings rose 22 percent, driven by record revenue in its investment banking and capital markets segments.

Net income rose to $585 million, or $1.96 per share, easily topping analysts estimates of $1.69. Year-ago net income was $481 million, or $1.71 per share. Revenue rose to $2.88 billion from $2.3 billion. Analysts had forecast revenue of $2.64 billion.

Investment banking revenue rose 27 percent to a record $608 million, from $477 million in the year-ago period, reflecting a 95 percent increase in merger and acquisition advisory fees — to the company's highest level in almost four years — and record revenues from debt origination activity.

Capital markets net revenues increased 18 percent to $1.8 billion from $1.5 billion last year, driven by continued strength in Lehman's fixed income franchise and a rebound in equities trading. "A significant increase in the foreign exchange business and continued strength in mortgage products contributed to robust fixed income customer flow activity," Lehman said.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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