Lehman Bros. Holdings Inc. is reporting much weaker net income, as it tries to recover from the September 11 attack.

Lehman reported a 32% drop in third-quarter profits to US$309 million, or $1.14 per share, for the three months ended August 31. This compares with US$457 million in the quarter last year.

“With diversification across the equities, fixed income and investment banking businesses, and regional diversity as well as our extensive global activities, the firm is showing that it can produce strong revenues and earnings even when one or more sectors of the industry are not performing well,” said Richard Fuld, Lehman’s CEO, in a statement.

This was before the attack, since the attack, the firm has been in recovery mode. It has entered into a long-term agreement for office space and trading facilities at the Jersey City, N.J., headquarters of Datek Online Holdings Corp. Lehman will immediately occupy approximately 150,000 square feet; Datek will continue to occupy five floors, or approximately 260,000 square feet.

The building, which was completed in March 2001, includes two built-out trading floors that Lehman Brothers will occupy.

Following the tragedy, Lehman Brothers has been conducting a full range of debt and equity sales and trading activities from its own offices at 101 Hudson Street in Jersey City. It also rented 650 hotel rooms in midtown Manhattan for some of its 1,000 investment bankers.

Joseph Gregory, Lehman’s chief administrative officer, said, “With a great cooperative spirit from Datek, we are now able to quickly expand our trading floors into a state-of-the-art facility. This expansion will cover our immediate business needs without impacting our overall strategic commitment to New York City.”