Annaly Capital Management (NLY) Q4 2025 earnings summary

Executive summary

• Achieved an economic return of 20.2% for 2025 and 8.6% for Q4, with a total shareholder return of 40% for the year and GAAP net income of $1.40 per share for Q4 and $2.92 for the year.

• Portfolio grew nearly 30% year-over-year to $104.7 billion, driven by capital deployment across Agency MBS, Residential Credit, and MSR strategies.

• Maintained a conservative leverage profile, with economic leverage at 5.6x and GAAP leverage at 7.2x at year-end.

• All three business segments—Agency, Residential Credit, and MSR—delivered double-digit growth and robust performance.

• Entered 2026 well-positioned with a constructive market environment and enhanced risk-adjusted return prospects.

Financial highlights

• Book value per share increased to $20.21, up from $19.15 a year ago and 5% quarter-over-quarter.

• Earnings available for distribution (EAD) per share was $0.74 for Q4, exceeding the $0.70 dividend.

• Net interest margin (excluding PAA) for Q4 was 1.69%, with a net interest spread of 1.49%.

• Q4 GAAP net income per share was $1.40, with annualized GAAP return on average equity of 26.14%.

• Unencumbered assets at quarter-end totaled $7.8 billion, with $6.1 billion in cash and agency MBS.

Outlook and guidance

• Positioned for continued strong results in 2026 across all investment strategies, with a favorable operating environment.

• Agency MBS expected to deliver low to mid-teen prospective returns due to lower volatility and hedging costs.

• Non-agency and MSR segments targeted for increased capital allocation, aiming for a longer-term mix of 50% agency, 30% RESI, and 20% MSR.

• Confident in maintaining and out-earning the dividend in Q1 2026.

• Market expects two 25 bps Fed rate cuts in 2026, with fixed income technicals remaining positive.