According to Financial Times News, Apollo Global just posted some surprisingly strong numbers despite widespread concerns about falling interest rates. The investment group reported $1.7 billion in overall profits, with its Athene insurance unit generating $871 million in spread profits – that’s the highest quarterly figure in two years. The real story though is the lending volume: Apollo originated $75 billion in new loans last quarter alone, bringing their 12-month total to a massive $273 billion. They’re actually on track to beat their own five-year lending targets ahead of schedule.
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What investors were worried about
Here’s the thing – Apollo’s stock has been getting hammered this year, down about 25% while rivals like Blackstone and Ares performed better. Why? Because Apollo’s merger with Athene made them way more exposed to interest rate movements. When you’re earning spreads between insurance liabilities and private credit returns, falling rates can really squeeze your profits. And that’s exactly what happened earlier this year when Apollo had to lower its spread earnings growth forecast from 10% to just 5%. Basically, the high-yielding pandemic-era loans were maturing and being replaced with lower-yielding debt.
How they pulled it off
So how did they still manage to deliver near-record profits? Volume, volume, volume. Apollo basically flooded the market with new loans – we’re talking $75 billion in just three months. That’s a 40% increase from their lending pace a year ago. They’re making massive bets on companies like Intel and EDF, competing head-to-head with traditional banks like Citigroup. The strategy seems to be: if you can’t get the same yield per loan, just make way more loans. And it’s working. They also hedged $9 billion of interest rate exposure to protect against further rate declines.
What this means for everyone else
Look, this is bigger than just one quarter’s earnings. Apollo is demonstrating that private credit isn’t just a niche alternative anymore – it’s becoming a mainstream financing source that can compete with traditional banking. For corporate borrowers, that means more options outside the regulated banking system. For investors, it shows that scale matters in private credit. But the question remains: can Apollo keep this lending frenzy going without taking on too much risk? And what happens when the next credit cycle turns? For now though, they’ve proven that even in a challenging rate environment, massive scale can still deliver impressive results.
