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Invesco Mortgage Q2 mixed as agency mortgage values weakened by rising yields (NYSE:IVR)

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Invesco Mortgage Capital (NYSE:IVR) Q2 results came in mixed as its book value was hampered by a slump in agency mortgage valuations amid the Federal Reserve’s rate hiking campaign.

“While our outlook on valuations remains cautious in the near term, we expect the environment for Agency RMBS to improve later this year given the attractiveness of spreads relative to other fixed income sectors and the decline in mortgage origination,” said CEO John Anzalone.

Adjusted EPS of $1.40 at the end of June exceeded the average analyst estimate of $0.83 and climbed from $1.16 at March 31 and $0.96 at June 30, 2021.

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Net interest income for Q2 was $41.1M, missing the consensus of $44.0M and sliding from $44.3M in Q1 and $46.3M in Q2 2021.

Net interest margin rose 93 basis points to 3.48% in Q2 vs. Q1, mostly due to higher average earning asset yields.

Book value of $16.16 per share in Q2 vs. $20.78 a year ago.

In the wake of rising interest rate across the board, the mortgage REIT’s leverage was lowered. Debt-to-equity ratio was 3.4x as of June 30, compared with 5.2x as of March 31.

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Earlier, Invesco Mortgage Capital raised its dividend to $0.905 per share.

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