JP Morgan entered the microfinance arena, launching a Social Sector Finance unit inNovember 2007.
The long-term outlook for equity investment in microfinance is positive, despite the financial crisis, says J.P. Morgan and CGAP (Consultative Group to Assist the Poor), a microfinance group based at the World Bank.
The analysis comes in a joint report, issued in February 2009,that challenges conventional approaches to equity valuation in microfinance and establishes the first benchmarks for microfinance equity valuations. After a downturn in 2009, the report predicts that valuations will bounce back in 2010.
"Leading microfinance institutions, especially those with solid domestic funding from local deposits, should emerge stronger from the financial crisis," said Elizabeth Littlefield, CGAP CEO and a co-author of the report. "Microfinance managers will need to slow heady growth rates and be extra vigilant about arrears in loan portfolios, but the fundamentals of the sector, and the underlying credit worthiness of its low-income clients, are very solid."
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