JPMorgan has launched a microfinance unit as part of its emerging markets strategy.

Christina Leijonhufvud, head of JPMorgan's new Social Sector Finance unit (SSF), told the Financial Times: "This is a global initiative, and part and parcel of the investment bank's growing reach in emerging markets... We are interested in having a social impact and we believe microfinance is an effective tool to do so. This is a business opportunity that we think will grow over time."

The SSF will initially focus on markets where the bank already has a strong local presence, and its scope will include capital markets, structured products and principal investments.

Rapid expansion of the microfinance industry and the demonstrated profitability of many microfinance providers has sparked interest amongst private sector investors. JPMorgan estimates the potential demand for "sustainable" financial services in the developing world to be $300bn (£1.5bn). Other banks already involved in microfinance include Morgan Stanley, Deutsche Bank and HSBC.