Mortgage REITs including Annaly post higher Q2 profits

(Reuters) - Four mortgage real-estate investment trusts (REITs), including Annaly Capital Management Inc (NLY.N), reported higher quarterly profits, as they reaped the benefits of lower borrowing rates and investments in high-quality assets.

Mortgage agency REITs look to borrow from short-term markets at a lower rate, and invest their equity capital and borrowed funds in long-term instruments like agency mortgage-backed securities (MBS) at a higher rate to make a profit.

For the second quarter, New York-based Annaly, reported net income available to shareholders of $592.4 million, or $1.08 a share, compared with $302.7 million, or 59 cents a share, a year ago.

"Mortgage rates trended up during the quarter, which should serve to further dampen refinancing activity going forward," Annaly's Chief Operating Officer Wellington Denahan-Norris said.

The company's net interest income was up 17 percent to $387.8 million during the quarter. Analysts were looking for a profit of 60 cents a share, excluding items, according to Reuters Estimates.

The REITs, which mainly invests in debt backed by Fannie Mae and Freddie Mac, have been performing well despite a global economic slowdown as institutional and individual investors have turned to them for management of their assets.

Separately, Santa Monica, California-based Anworth Mortgage Asset Corp (ANH.N) said quarterly net income available to common shareholders was $32.5 million, or 31 cents a share, compared with $24.3 million, or 29 cents a share, a year earlier.

Net interest income for the period rose 32 percent to $38 million, the company said.

Mortgage REIT American Capital Agency Corp (AGNC.O) said its net income for the second quarter was $30.4 million, or $2.02 per share.

"Our results for the quarter benefited from several factors, including slower than expected prepayment speeds, a larger investment portfolio, lower funding costs and improved valuations on higher coupon agency securities," said Gary Kain, chief investment officer at AGNC. [ID:nWNBB5284]

AGNC shares rose 9 percent or $2.06 to $26.00 in after the bell trading on the Nasdaq following the earnings announcement.

Dallas-based Capstead Mortgage Corp (CMO.N) reported net income for the quarter of $42.5 million, or 58 cents a share, compared with $36.7 million, or 58 cents a share last year.

In after the bell trading, shares of Annaly were up 21 cents at $16.53 while Anworth's shares increased 17 cents to $7.55. Capstead shares fell 4 cents to $13.20.

(Reporting by Brenton Cordeiro in Bangalore, Editing by Dinesh Nair)