NEW YORK, March 18: Goldman Sachs and Lehman Brothers, two of Wall Street’s biggest investment banks, both announced sharp declines in quarterly profits on Tuesday as a credit squeeze ravages US financial markets.

Goldman’s chairman and chief executive, Lloyd Blankfein, said “market conditions are clearly very difficult,” while his counterpart at Lehman, Richard Fuld, said the banking industry was facing “challenging” times.

Goldman Sachs’s fiscal first-quarter earnings plunged 53 per cent to $1.51 billion compared with the same period a year earlier while Lehman’s fiscal first-quarter profits slumped 57 per cent to $489 million.

Despite the earnings declines, investors breathed a sigh of relief as Goldman and Lehman’s respective earnings were better than most analysts had predicted.

Banking stocks have come under extreme pressure in recent weeks as a broadening credit crunch has gripped Wall Street and investors have sold off financial shares.

The takeover price shocked many Wall Street veterans as Bear Stearns had had a market worth in the billions of dollars just weeks ago, but its value evaporated amid fears it would have to seek bankruptcy protection.

Goldman reported earnings per share of $3.23 while Lehman announced earnings of 81 cents. Analysts had expected earnings of $2.58 and 72 cents, respectively.

Lehman Brothers, which is considerably smaller than Goldman with a market value of about $20 billion, said its revenues had also been stressed by troubled mortgage investments.—AFP