Wall Street brokerage giant Lehman Brothers Holdings Inc. reported record profit today.

The firm reported net income of US$823 million for the fourth quarter ended November 30, up 41% from the same quarter last year, but down from the third quarter when net income was US$879 million. For the 2005 full fiscal year, net income increased 38% to a record US$3.3 billion, compared to US$2.4 billion in fiscal 2004.

Lehman reported net revenues (total revenues less interest expense) for the fourth quarter of fiscal 2005 of US$3.7 billion, an increase of 28% from US$2.9 billion reported in the fourth quarter of fiscal 2004 and a decrease of 4% from the US$3.9 billion reported in the third quarter of fiscal 2005.

Investment banking revenues were a record for the quarter, increasing 34% to US$817 million from US$608 million in the fourth quarter of fiscal 2004. The firm said these results were driven by record merger and acquisition advisory revenue, which increased 54% from the prior year’s period, and solid performances in equity and debt origination, which increased 48% and 15%, respectively, from the prior year’s period.

Capital markets net revenues increased 30% to US$2.4 billion in the fourth quarter of 2005 from US$1.8 billion in the prior year’s fourth quarter on strong performances from both fixed income and equities capital markets. Fixed income revenues increased 22% in the quarter, primarily due to higher revenues in interest rate products and high grade credit. Equities revenues, which increased 49% compared to the fourth quarter of fiscal 2004, were driven by increased customer flow activity across most products, and represented the second highest quarterly level ever.

The firm also reported its second highest revenue quarter ever in investment management, with net revenues increasing 13% to US$509 million in the fourth quarter of fiscal 2005, from US$452 million in the fourth quarter of fiscal 2004. This strong performance was driven by record revenues in the private investment management business and record assets under management, which grew to US$175 billion. In addition, the Firm posted its highest level ever of non U.S. revenues in the fourth quarter of fiscal 2005, reflecting the firm’s increased scale in Europe and Asia.

For the full 2005 fiscal year, net revenues increased 26% to a record US$14.6 billion, from US$11.6 billion for fiscal 2004, with record net revenues in each business segment and in each region.

Richard Fuld, Jr., chairman and chief executive officer, said, “By every measure, we delivered another strong quarter and finished the year with our best results ever. Record performances for the year across all of our segments and regions continue to demonstrate the diversity, depth and scale of our global franchise.”