Integrating Microfinance into the Global Financial System

1. Integrating Microfinance into the Global Financial System 3rd Annual Global Microfinance Investment Congress New York – May 25th, 2010

2. MIVs | Volumes USD constant

3. MIVs | Lower Performance SMX USD SMX USD Underlying Funds

4. MIVs | Lending Rates • Averagelending rates, in USD, investment grade MFIs

5. The Ugly Side of Microlending How big Mexican banks profit as many poor borrowers get trapped in a maze of debt. Easy Money Microcredit is booming in India, but the loans don't often pull people out of poverty. Banquier des pauvres « Les IMF sont-elles vraiment fidèles à leur vocation sociale, ou ont-elles trouvé parmi les démunis, de plus en plus nombreux, un marché à conquérir ?" Yunus Blasts Compartamos The Nobel Prize-winning microfinance pioneer refuses to mention the words "Compartamos" and "microfinance" in the same breath . Développement : quand la « bulle » de la microfinance éclatera La microfinance n'est ni « bonne » ni « mauvaise » : tout dépend de la manière dont elle est mise en oeuvre. MIVs | Growing Critics toward Microfinance • Main critics • Consumer lending • Over-indebtedness • High interest rates • High profits

6. MIVs | Summary • Over liquidity • Differentiation in fund strategies • First defaults and loan rescheduling, provisions were booked • Impact of FX fluctuations • Higher competition amongst lenders, lower portfolio yields • Lower absolute and risk adjusted returns to investors • Growing critics and questions toward microfinance • Lower demand for funding • Address critics (social performance measurement) • Local currency

7. MFIs | Deterioration of Fundamentals

8. MFIs | Deterioration of Fundamentals

9. MFIs | Summary • Overheating markets (Nicaragua, Bosnia, Cambodia, Morocco, ..) • Deteriorating fundamentals • First defaults and loan rescheduling • Slower growths • Lower cost of funding • FX exposure, needs for local currency funding

10. Q & A • Thankyou !