Two U.S. investment banks, Bear Stearns and Lehman Brothers, posted record results in the last quarter.

The Bear Stearns Companies Inc. reported net income for the fourth quarter of 2006 was US$563 million, up 38% from US$407 million for the fourth quarter of 2005. Net revenues for the 2006 fourth quarter were US$2.4 billion, up 28% from US$1.9 billion for the 2005 fourth quarter. The annualized return on common stockholders’ equity for the fourth quarter of 2006 was 20.5%.

For the fiscal year ended November 30, net income was US$2.1 billion, up 40% from the US$1.5 billion earned in the twelve-month period ended November 30, 2005. Net revenues for fiscal year 2006 were US$9.2 billion, an increase of 25% from US$7.4 billion in the prior fiscal year.

“We are pleased to announce Bear Stearns’ fifth consecutive year of record net income and earnings per share,” said James Cayne, chairman and chief executive officer. “Our continued success is a testament to our unwavering focus on serving our clients with excellence; attracting and retaining talented professionals and profitably expanding our broad and diverse franchise. I look forward to 2007 and our continued expansion both internationally and domestically.”

Net revenues in Capital Markets, which includes Institutional Equities, Fixed Income and Investment Banking, were US$1.8 billion for the fourth quarter of 2006, up 26%. Institutional Equities net revenues were US$397 million, up 7%, led by record results from risk arbitrage and continued strong results from equity derivatives and international sales and trading. Fixed Income net revenues were US$1.1 billion, up 25% from. Investment Banking net revenues were US$364 million in the quarter, up 58% due to higher underwriting and merger and acquisition transaction volumes.

At the same time, Lehman Brothers Holdings Inc. reported net income of US$1.0 billion for the fourth quarter, up 22%. For the 2006 full fiscal year, net income increased 23% to a record US$4.0 billion.

Richard Fuld, Jr., chairman and chief executive officer of Lehman, said, “Once again, we have achieved outstanding results across all our business segments and geographic regions this year. Our record performance is the result of our client-focused strategy and our continued investment in strategic areas that enable us to deliver the best capabilities, intellectual capital and solutions to our clients. As always, our success is a tribute to how well our people continue to work together across the firm to deliver superior value to our clients and shareholders.”

Net revenues for the fourth quarter of fiscal 2006 were US$4.5 billion, an increase of 23% from the fourth quarter of fiscal 2005. Investment Banking revenues were a record for the quarter, increasing 5% to US$858 million, driven by strong performances in debt and equity origination and solid M&A advisory revenue. Capital Markets net revenues increased 28% to US$3 billion on strong performances from both Fixed Income and Equities Capital Markets. The firm also reported its highest revenue quarter in Investment Management, with net revenues increasing 26% to US$640 million, driven by record revenues in Private Investment Management and record-matching revenues in Asset Management. Assets under management grew to a record US$225 billion.

For the full 2006 fiscal year, net revenues increased 20% to a record US$17.6 billion, from US$14.6 billion for fiscal 2005, with record net revenues in each business segment and in each region. For fiscal 2006, non-U.S. revenues grew 21% to a record US$6.5 billion, representing 37% of firm-wide net revenues.