Lehman Brothers and Goldman Sachs both saw their profits more than halved in the first quarter of 2008.
Lehman's net income was $489m (£242m) in the first three months of 2008, compared with $1.15bn in the same period of 2007.
Goldman Sachs's net income fell to $1.51bn (£750m) compared with $3.2bn in the first three months of 2007.
Both results were better than expected and shares soared. Lehman Brothers was up 46% and Goldman Sachs gained 16%.
Analysts feared the impact of the credit crunch would be worse.
Lehman Brothers stressed the strength of its liquidity after the worries which led to the sale of Bear Stearns to JPMorgan Chase at a bargain price over the weekend.
Its chief executive Richard Fuld said the results "reflect the value of our continued commitment to building a diversified platform and our focus on managing risk and maintaining a strong capital and liquidity position".
Billion dollar losses
Goldman Sachs, Wall Street's biggest investment bank, said that its net losses from debt linked to residential mortgages were about $1bn.
Its chief executive Lloyd Blankfein said in a statement that, "market conditions are clearly very difficult".
But he added that "although market conditions present many challenges at the moment, they also offer considerable opportunities."
Goldman managed to increase its assets under management by 21% to a record $873bn.
Goldman Sachs and Lehman Brothers are the first and fourth biggest investment banks respectively.