European microfinance funds record 16% volume growth in 2009

Microfinance Monitor, March 6, 2010: PlaNIS, an entity of PlaNet Finance Group dedicated to advising SRI (Socially Responsible Investment) funds, has reported that during the last decade, the microfinance sector has benefited from a sustained growth due to an increased interest from many international investors.
In 2008, European funds assets dedicated to microfinance have grown by 31% thanks to private investors and public entities.

In 2009, in a very tough economic environment damaged by the crisis, SRI (Socially Responsible Investment) funds dedicated to microfinance have continued to increase their fundraising, with a 16% volume growth. Today, SRI European funds represent more than $ 6 billion.

Nevertheless, in 2009 and contrary to the previous years, the earning rates for SRI funds dedicated to microfinance have strongly decreased to reach rates between 1.74% and 2.31% which used to be at an average of 4%.

The results at a glance show:

- An increasing credit-related risk: Outstanding payments linked to high-risk-portfolio, generated by credit repayment default reaching up to 20% in certain areas.All this, has led some funds to settle very significant provisions.

- The growing over-liquidity of numerous microfinance funds leading to the drop of their revenues: Slowdown of MFIs’ development, combined to a more regulated credit policy, has drawn to the decrease of their financing demand. At the present time, PlaNIS estimates the total non-used liquidity to $1 billion which represents about 20% of the asset under management.

- Local currencies volatility

Despite hard market conditions, PlaNIS managed to maintain good results for 2009. Its portfolio has increased by about 30% (from $119 million to $153 million), and the average return of the financing programs proposed to advised funds has come about 9%.