Lehman Brothers Holdings Inc. reported record net income of US$1.3 billion for the second quarter ended May 31, up 27% from net income of US$1 billion for the second quarter of fiscal 2006.

The Wall Street investment bank said met income also increased 11% from US$1.1 billion for the first quarter of fiscal 2007. For the first half of 2007, the firm reported record net income of US$2.4 billion, up 16% from the first half of fiscal 2006.

Chairman and CEO Richard Fuld, Jr. said, “Our record results for the second quarter and the first half reflect our ongoing commitment to achieving diversified growth. With non-U.S. net revenues representing nearly half of our total net revenues for the quarter, our global platform is stronger and more balanced than ever. To build on this momentum, we remain focused on leveraging our resources and capabilities to maximize value for our clients and shareholders.”

Net revenues (total revenues less interest expense) for the second quarter were a record US$5.5 billion, an increase of 25% from US$4.4 billion reported in the second quarter of fiscal 2006 and an increase of 9% from the US$5.0 billion reported in the first quarter of 2007. For the first six months of fiscal 2007, the firm reported record net revenues of US$10.6 billion, an increase of 19% from US$8.9 billion for the first half of fiscal 2006.

Capital Markets reported record net revenues of US$3.6 billion in the second quarter, an increase of 17% from US$3.1 billion in the second quarter of fiscal 2006, driven by a record performance in Equities Capital Markets. Fixed Income Capital Markets reported net revenues of US$1.9 billion, a decrease of 14% from US$2.2 billion in the second quarter of fiscal 2006, as strong client demand across most products and increased real estate and credit product revenues were more than offset by continued weakness in the U.S. residential mortgage business and decreased revenues in the firm’s municipal and interest rate products businesses.

Equities Capital Markets reported record net revenues of US$1.7 billion, nearly double the US$878 million reported in the second quarter of fiscal 2006. This performance was driven by record overall customer activity and strength in execution services, prime services and equity derivatives businesses, as well as profitable trading strategies.

Investment Banking reported record revenues of US$1.2 billion, an increase of 55% from US$741 million in the second quarter of 2006. This increase was driven by record debt origination revenues, which rose 87% to US$540 million from US$289 million in the second quarter of 2006, record equity origination revenues, which rose 60% to US$333 million from US$208 million in the second quarter of 2006, and record advisory revenues, which rose 14% to US$277 million from US$244 million in the second quarter of fiscal 2006.

Also, Investment Management reported record net revenues of US$768 million, an increase of 30% from US$592 million in the second quarter of fiscal 2006. Additionally, assets under management grew to a record US$263 billion.

Non-interest expenses for the second quarter of 2007 were US$3.6 billion, compared with US$3.3 billion in the first quarter and US$2.9 billion in the second quarter of 2006.

The firm’s pre-tax margin was 34.1% for the second quarter, compared with 34.0% for the second quarter of 2006. Return on average common equity was 25.8% for the second quarter of 2007, compared with 23.7% for the second quarter of 2006.