NLY · Annaly Capital Management, Inc.

Annaly Capital Management, Inc. reported strong Q1 2026 results, with GAAP net income of $282.7 million, more than doubling from $124.2 million in the prior-year quarter. This 127.5% year-over-year increase, alongside diluted EPS of $0.33 (up 120.0% from $0.15), highlights the effectiveness of the company's core activities in income generation and capital preservation. These outcomes stem from proactive portfolio management, supported by a conservative liquidity and leverage posture that limits borrowings to maintain unused capacity and balance sheet strength.

The company's principal business objective is pursued through careful portfolio construction, calibrated market risk exposure, related hedge profiles, and leverage forms, all operating within established capital allocation policy and risk governance frameworks. Residential securities, mortgage loans, interest rate swaps, swaptions, and TBA derivative markets remain active, enabling transparent pricing and informed positioning. Investment and market risk—stemming from interest rate changes affecting asset values and financing costs—is actively managed to protect earnings and capital.

Net cash provided by operating activities shifted to a use of $1.40 billion from $156 million last year, primarily due to investment timing as capital is deployed strategically. Management commentary notes dynamic capital allocation across business lines in response to relative value opportunities, with a focus on maintaining liquidity through stress-tested pools of liquid assets that guide funding plans. This approach ensures resilience amid market volatility, prioritizing long-term stability over short-term expansion.

Overall, these results demonstrate disciplined execution in a complex environment, where changes like increased compensation expenses are absorbed within a framework that balances growth and risk. The upsurge in profitability reflects successful navigation of interest rate and credit dynamics, positioning Annaly to capitalize on future opportunities while upholding conservative risk management.