LEHMAN Brothers has had its credit rating confirmed by Moody's Investors Service, a move that was against market expectations. Last week's announcement coincided with Moody's downgrading of JP Morgan and Bankers Trust. The three-month review affirmed Lehman's A3 senior debt rating and Baa2 subordinate debt rating. It came out of the blue for Lehman which had expected to be down-graded, the usual pattern when a bank is placed on review. The rating agency said it 'remains cautious' about Lehman Brothers' outlook but recognised efforts to lower Lehman's cost structure and diversify outside its traditional fixed-income business. Following its de-merger with American Express in 1993, Lehman put in place a cost-cutting programme which left it better placed to face the severe market downturn, particularly in fixed-income business, said Hong Kong general manager and chief operating officer, Jarett Wait. Moody's highlighted the firm's 'strategic focus on customer flow business rather than on more volatile proprietary position taking' as a reason for the no-change policy. Like all the big Wall Street firms, Lehman suffered a harsh trading environment during 1994. In the 11-month period to November it earned US$113 million (HK$872 million), against $335 million for all of 1993. It has plans to slash a further $300 million in expenses. 'We will try to grab market share while everybody else is worrying about cutting costs,' Mr Wait said.