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.

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