Annaly (NLY) Tops Q3 Earnings Estimates, Reports Negative NII
Annaly Capital Management, Inc. NLY reported third-quarter earnings available for distribution (EAD) per average share of 66 cents, which surpassed the Zacks Consensus Estimate of 65 cents. The figure declined from $1.06 in the year-ago quarter.
NLY registered year-over-year declines in book value per share (BVPS) and margin, while the average yield on interest-earning assets improved.
Per management, “Annaly entered the quarter with lower leverage and substantial liquidity, which, along with our dynamic hedging, enabled us to remain nimble. Despite our active portfolio management, higher rates and spreads weighed on our book value and economic return for the quarter. While risks to the operating environment persist, we expect to benefit from attractive investment returns across our three businesses and a supportive financing environment. Within Agency MBS, historically wide spreads provide ample compensation for above average volatility and technical challenges.”
Inside the Headlines
Net interest income (NII) was negative $45.33 million in the reported quarter against the Zacks Consensus Estimate of $330 million. In the prior-year quarter, the company reported $277.99 million in NII.
At the third-quarter end, Annaly had $89.6 billion of total assets, up marginally from the prior quarter. At the end of the quarter, unencumbered assets were $4.7 billion.
In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 4.49%, up from the prior-year quarter’s 3.47%. The average economic costs of interest-bearing liabilities were 3.28%, increasing from 1.54%.
Net interest spread (excluding PAA) of 1.18% in the third quarter fell from 1.70% in the prior-year quarter. Also, the net interest margin (excluding PAA) was 1.48% compared with 1.98% in third-quarter 2022.
Annaly’s BVPS was $18.25 as of Sep 30, 2023, down 8.5% from $19.94 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 13.1%, up from 11.8% in the prior-year quarter.
In the third quarter, the weighted average actual constant prepayment rate was 7.3%, sequentially up from 7%.
Economic leverage was 6.4X as of Sep 30, 2023, up from 5.8X sequentially but down from 7.1X in the prior-year quarter. Annaly generated an annualized EAD return on average equity (excluding PAA) of 12.96% in the third quarter, down from the prior-year quarter’s 17.57%.
NLY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Annaly Capital Management Inc Price, Consensus and EPS Surprise
Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote
Earnings Dates of Other Companies
We now look forward to the earnings results of other companies in the REIT space, like Starwood Property Trust STWD and AGNC Investment Corp. AGNC.
AGNC is set to report Q3 numbers on Oct 30, whereas STWD will report the quarterly results on Nov 8.
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Annaly Capital Management Inc (NLY) : Free Stock Analysis Report
