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Liquidity risk

12 Months Ended

Dec. 31, 2017

Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations as they fall due, or will have to do so at an excessive cost. This risk arises from mismatches in the timing of cash flows which is inherent in lending operations and can be affected by a range of Group-specific and market-wide events.

Liquidity risk management

The Group established a comprehensive policy and control framework for managing liquidity risk. The Group’s treasury department is responsible for managing the Group’s liquidity risk via monitoring borrowing and managing relationship with several securities exchanges. The Group’s treasury department executes the Group’s liquidity and funding strategy in co-operation with lending department of the Group.

According to relevant laws and regulations, the funds obtained by a microfinance company from banking financial institutions may not exceed 50% of its net capital. As of December 31, 2017, the funds obtained from banking financial institutions were at 34.4%.

The table below presents a maturity analysis of the Group’s financial assets and liabilities. The sum of the balances depicted in the maturity analysis do not reconcile with the carrying amount of the assets/liabilities as disclosed in the Consolidated Statement of Financial Position. This is because the maturity analysis incorporates, on an undiscounted basis, all cash flows relating to principal and interest payments.

December 31, 2017	Carrying amount		Less than 1 month		1-3 months		3 months to 1 year
Financial assets	RMB’000		RMB’000		RMB’000		RMB’000
Cash and cash equivalents		21,717		21,717		-		-
Loan receivables		791,390		75,460		115,621		668,106
		813,107		97,177		115,621		668,106
Financial liabilities
Loans payable		226,370		34,048		48,219		156,549

December 31, 2016
Financial assets
Cash and cash equivalents		96,791		96,791		-		-
Loan receivables		675,341		149,009		118,827		470,639
		772,132		245,800		118,827		470,639
Financial liabilities
Loans payable		200,470		8,290		70,057		129,755