Annaly Q1 Earnings Surpass Estimates, Book Value Declines Y/Y

Zacks Equity Research

Thu, May 1, 2025, 10:07 AM 3 min read

Inside Annaly’s Headlines

Net interest income (NII) was $219.9 million in the reported quarter, which missed the Zacks Consensus Estimate by 46.2%. In the prior-year quarter, the company reported a negative NII of $6.45 million.

At the end of the first quarter, Annaly had $105.1 billion of total assets, rising 1.5% from the prior quarter.

In the reported quarter, the average yield on interest-earning assets (excluding premium amortization adjustment or PAA) was 5.23%, up from the prior-year quarter’s 4.87%. The average economic costs of interest-bearing liabilities were 3.88%, up from 3.78% in the year-ago quarter.

Net interest spread (excluding PAA) of 1.35% in the first quarter increased from 1.09% in the prior-year quarter. Also, the net interest margin (excluding PAA) was 1.69% compared with 1.43% in the first quarter of 2024.

Annaly’s BVPS was $19.02 as of March 31, 2025, down 3.6% from $19.73 in the prior-year quarter. At the end of the reported quarter, the company’s economic capital ratio was 14.6%, unchanged from the prior-year quarter.

In the first quarter, the weighted average actual constant prepayment rate was 7.1%, up from 6% in the year-ago quarter.

Economic leverage was 5.7X as of March 31, 2025, up from 5.6X in the year-ago quarter.

Annaly generated an annualized EAD return on average equity of 14.43% in the first quarter, which increased from the prior-year quarter’s 12.63%.

Our Take on Annaly

Annaly’s first-quarter results benefited from the rise in average yield and total assets. Its prudent asset selection will continue to drive performance in the upcoming period. However, a decline in book value per share is concerning. Also, achieving solid returns may be challenging due to the growing concerns in financial markets.