Wall Street firm Lehman Brothers Holdings Inc. reported lower net income today, compared with the previous quarter.

The firm reported net income of US$683 million for the second quarter ended May 31, up 12% from the second quarter of fiscal 2004. Second quarter net income declined from US$875 million from the record first quarter of 2005.

For the first half of the fiscal year, the firm reported record net income of US$1.6 billion, up 22% from the first half of fiscal 2004.

Net revenues for the second quarter were US$3.3 billion, up 12%, from US$2.9 billion for the same period in fiscal 2004, and down 14% compared to US$3.8 billion in the first quarter of 2005.

Investment banking revenues increased 6% to US$579 million for the second quarter of fiscal 2005, from US$546 million for the same period a year ago, reflecting the second highest debt underwriting revenue level ever and the second highest quarterly equity underwriting revenue in almost five years.

Capital markets revenues increased 14% to US$2.2 billion in the second quarter of fiscal 2005, from US$2.0 billion in the second quarter of 2004. Within this segment, the fixed income business reported revenues of US$1.8 billion in the second quarter of fiscal 2005, a 23% increase from US$1.4 billion reported in the prior year, and down 15% versus the first fiscal quarter of 2005. Equity capital markets revenues decreased 9%, to US$474 million, compared to US$520 million for the prior year’s second quarter, largely attributable to challenging conditions in the convertibles market. Investment management revenues, which increased 10% to US$472 million in the second quarter of fiscal 2005, from US$429 million in the second quarter of fiscal 2004, were driven by a record asset management performance.

For the quarter, the firm’s pretax margin was 30.9%, compared to 30.2% in the fiscal 2004 second quarter and 34.3% in the fiscal 2005 first quarter. For the fiscal 2005 second quarter, the firm’s return on average common equity was 18.2%, compared to 18.6% in the fiscal 2004 second quarter and 24.5% in the fiscal 2005 first quarter. Return on average tangible common equity was 23.5% for the second quarter of fiscal 2005, compared with 26.0% in the second quarter of fiscal 2004 and 32.0% in the first quarter of fiscal 2005.

Chairman and CEO Richard Fuld Jr. said, “Although we faced tougher markets this quarter, we are announcing our second best quarter ever. The firm is truly benefiting from the regional diversification and increased depth and scale of business that we have worked so hard to achieve. With our continued discipline around expense and risk management, we are well-positioned to continue to deliver strong returns to our shareholders.”