Lehman result raises hopes for Europe's banks

By Andrew Hurst, European Banking Correspondent

ZURICH (Reuters) - Lehman Brothers' LEH.N better than expected fiscal third-quarter results may augur well for European banks with big investment banking units who start reporting next month, analysts said on Tuesday.

The results soothed investors, despite a 3.2 percent fall in earnings for the three months ended August 31 and a $700 million write-down of mortgage and leveraged loan assets. Lehman's shares were up 3.12 percent at $60.45 by 1550 GMT in New York.

"Revenues of $4.3 billion were in line with expectations despite a $700 million asset writedown on the fixed income side," said ABN AMRO in a research note.

"This bodes well for the European capital market banks, especially those with a large exposure to equities and primary: Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz), BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz), SocGen (SOGN.PA: Quote, Profile, Research, Stock Buzz)," it added.

But analysts said the Lehman statement did not shed much light on how business had played out over the three months, particularly in August, when the global liquidity crunch hit with full force.

"There are a lot of questions to ask. How did the months evolve and what is the growth write-down?" said one London-based analyst.

Others said they hoped Lehman would reveal more about how it had calculated the $700 million dollar write-down.

"The problem with the Lehman numbers is there is no balance sheet explanation of how they get to these figures," said Peter Thorne at Helvea in London.