Annaly Q3 2023 Earnings Report
Key Takeaways
Annaly Capital Management reported a GAAP net loss of ($1.21) per average common share and earnings available for distribution (EAD) of $0.66 per average common share for Q3 2023. The economic return was (8.8%) for the quarter, with a book value per common share of $18.25. The company maintained a total portfolio of $76.2 billion, including a $68.5 billion Agency portfolio, and actively managed its hedge position, increasing the hedge ratio from 105% to 115%.
GAAP net loss was ($1.21) per average common share, while earnings available for distribution (EAD) reached $0.66 per average common share.
The economic return for the third quarter was (8.8%), and the book value per common share stood at $18.25.
Total portfolio amounted to $76.2 billion, with $68.5 billion allocated to the highly liquid Agency portfolio.
The hedge ratio increased from 105% to 115% through active management of portfolio duration by adding longer-dated hedges.
Annaly
Annaly
Forward Guidance
While risks to the operating environment persist, Annaly expects to benefit from attractive investment returns across its three businesses and a supportive financing environment.
Positive Outlook
- Historically wide Agency MBS spreads provide ample compensation for above average volatility and technical challenges.
- Residential Credit business continues to grow, bolstered by strong performance from the whole loan correspondent channel.
- MSR portfolio is strengthened by stable cash flows and rising yields supporting valuations.
- Company entered the quarter with lower leverage.
- Company entered the quarter with substantial liquidity.
Challenges Ahead
- Fixed income markets faced challenges due to a rapid rise in global yields.
- Agency MBS spreads widened amidst ongoing supply.
- MBS runoff from Federal Reserve and bank portfolios contributed to spread widening.
- Elevated volatility impacted market conditions.
- Higher rates and spreads weighed on book value and economic return for the quarter.