LAM Chi Man, 46, started his banking career with the Bank of East Asia, Hong Kong's third biggest bank and quickly focused his career on the emerging banking industry on Chinese mainland.

The Hong Kong native is now the deputy chief executive of the Bank of East Asia (China) Ltd, the second biggest overseas bank on the mainland in terms of number of outlets.

Back in the early 1990s, when the mainland's banking industry lagged behind centers like Hong Kong and Singapore, he was able to recognize the opportunity and committed his future to the mainland market. He said he has never regretted his willingness to stake his future on the mainland.

The Bank of East Asia's presence on the mainland dates back to 1920, when it opened its Shanghai office. The bank incorporated its mainland subsidiary in 2007, after China joined the World Trade Organization and began opening its banking sector to overseas financial institutions.

On the mainland, Lam oversees the bank's personal banking, wealth management, card services, private banking, new product development, distribution management and marketing and communications. The Bank of East Asia, controlled by David Li and his family, is the largest independent local bank in Hong Kong, with consolidated assets of HK$534.2 billion (US$68.7 billion) as of December 31, 2010.

With its mainland headquarters based in Shanghai, the bank has positioned itself to capitalize on stronger links between Hong Kong and the mainland.

BEA China's assets grew to 153.03 billion yuan (US$23.5 billion) at the end of 2010, up 26.47 percent from 2009. Outstanding loans rose 7.93 percent to 91.6 billion yuan. The bank had more than 3,500 staff and 90 outlets in 25 mainland cities at the end of 2010.

The Hong Kong bank has been a frontrunner in overseas banks offering yuan-backed debit and credit cards on the mainland and was the first financial institution to issue yuan-backed bonds in Hong Kong and mainland.

In his office overlooking Shanghai's Huangpu River, Lam talked with Shanghai Daily about the bank's mainland strategy.

Q: The bank reported net profit growth of 11.78 percent to 1 billion yuan in 2010. What's your strategy to secure growth in China when the world's second biggest economy is restructuring in the post-crisis period?

A: We have been seeking our own path and our own positioning since we locally incorporated in 2007. Last year, we implemented a strategy to improve and restructure while maintaining growth against a backdrop of the country's changing macro-economic environment.

For China, it's a year of policy adjustment - it tightened monetary policy, showed a firmer hand to drive out housing speculation, while also appreciating the yuan.

Against a changing macro-environment, we set up a strategy to restructure, to secure growth and to control risks. We have boosted lending to more mid-sized companies, reduced our exposure to the real estate industry and better balanced our portfolio.

Q: You said you prioritized business loans to mid-sized companies as part of the bank's restructuring plan. What about small business loans?

A: We have started to put a lot of resources and efforts into expanding loans to small and medium-sized businesses because we believe it is a niche market by which we can differentiate ourselves from domestic banks. We can't fight with the Big Five banks, which enjoy deep-rooted relationships with big domestic corporations. But we can develop our own competitiveness in serving the rapidly growing small and medium-size business sector. The move also helps us diversify our clients and reduce reliance on major companies.

Q: Can you elaborate more on curbs to housing loans? What is the contribution of real estate loans to total loans now?

A: We are reducing our exposure to the real estate market to move in tandem with China's macroeconomic policies aimed at curbing speculation in the sector. We are following the call from the Chinese government in that sense. Meanwhile, we are also seeking to strengthen our own market position and we think it's the right move to cut the reliance on the housing sector. I think it's healthy to control real estate loans to less than 30 percent of total loans and we are on the path towards doing this.

It doesn't come as a surprise to see the volume of individual mortgages shrinking in line with the sluggish housing market. We have already beefed up steps to restructure our retail lending business to boost auto loans, individual credit loans and offer wealth management products catering to market needs.

Q: What about portfolio management to avoid maturity mismatches?

A: We are reducing the proportion of long-term loans that are 20 to 30 years in maturity and boosting short- and medium-term lending, such as those under five years, to better manage our portfolio. With regards to deposits, we are actively growing our deposit base, as well as seeking more sustainable growth. Last year, we increased deposits by 40 percent to 117.88 billion yuan. As a result, our loan-to-deposit ratio dropped to 78 percent at the end of 2010. We are very confident of meeting the regulatory requirement of 75 percent by the end of this year.

Q: You mention the bank's positioning when talking about restructuring. How would you describe the bank's positioning in China?

A: We know our competitive advantages: our Chinese heritage, our long links with the mainland, and our knowledge of the financial industry. We are not competing with banks like HSBC that boast a global network. We know exactly where our strength lies.

On one hand, we see ourselves as a local bank among overseas banks. As a Hong Kong bank, we have the same origins as mainland. We understand China. This is our advantage when compared with Western banks. On the other hand, we see ourselves as an overseas bank among local banks. We stand out with our roots and network in Hong Kong and in the region, and we can compete well with domestic banks in fighting for Chinese customers.

Q: Could you give us an example to illustrate how the bank leverages its strength in Hong Kong?

A: Let's take trade settlement in yuan, for instance. Hong Kong stands out as the main beneficiary of that program because the city is a major trade destination.

We have leveraged that position to expand the yuan business. Our yuan settlement services skyrocketed in 2010 when mainland authorities widely expanded the program to 20 provinces and municipalities. The settlement volume grew 10 times in 2010, compared with 2009. In the first three months of this year, the volume has already surpassed that of 2010.

Furthermore, our growing yuan trade settlement also helps the bank diversify profit channels. In 2010, non-interest income accounted for 13 percent of our total income. We hope the figure can grow this year.

Q: You explained how the bank capitalizes on the growing economic links between Hong Kong and the mainland. Back to your mainland business, what types of progress have you made in the mainland market in terms of clients?

A: We have a firm goal to be more localized. The proportion of overseas customers to local customers was 70 percent versus 30 percent before our local incorporation in 2007. Now, it's 40 percent overseas clients and 60 percent domestic. We are committed to growing our local clientele in China.

Q: How do you go about honoring your bank's commitment to mainland?

A: We buy 80 to 90 percent of the properties in which we operate on the mainland. It's a typical Asian way of doing business. It sends the signal that we are not here for the short-term. We base ourselves here with solid money outlays, buying the lion's share of the properties housing our outlets. The only reason why we don't have a 100 percent ownership on properties is because it's too difficult to buy a property in prime locations in cities like Shanghai.

Q: What kind of network expansion are you planning this year? The bank now holds the second biggest network among overseas banks on the mainland.

A: We opened 18 mainland outlets in 2010, and we expect the same pace of expansion this year.

At the branch level, we are going into new cities like Harbin in northern China and Changsha in central China. Second- and third-tier cities on the mainland are experiencing large growth potential. At the sub-branch level, we will go deeper into the coastal cities, which hold the bulk of Chinese affluence.

Experience has shown that growing our network can help us improve productivity.

Q: Will you continue with the "restructure, sustain growth and control risk" strategy this year?

A: Yes, the strategy will continue this year. The year of 2011 is the first year of the 12th Five-Year Plan. It is also the year of supervision and meeting regulatory requirements for the banking industry.

In the medium term over three to five years, we hope the Bank of East Asia China can contribute to half of the BEA group's total profits. That's our target.

Career

Dec 2006-Present

Deputy Chief Executive The Bank of East Asia (China) Ltd.

Oct 2000-Dec 2006

General Manager The Bank of East Asia, Dalian Branch

Feb 1997-Sept 2000

Deputy General Manager, The Bank of East Asia, Taipei Branch

July 1996-Jan 1997

Senior Business Manager, The Bank of East Asia, China Division

May 1995-June 1996

Vice President ING Bank, Shanghai Branch

Feb 1993-May 1995

General Manager, The Bank of East Asia, Xiamen Branch

May 1992-Jan 1993

Business Manager, The Bank of East Asia, Guangzhou Branch

Dec 1989-April 1992

Business Manager, The Bank of East Asia, Business Development Deptartment

Education Background

PhD in Business Administration

University of South Australia (Australia)

Master of Advanced Business Practice

University of South Australia (Australia)

Master of Business Administration

Murdoch University (Australia)

MSc Business Studies (Marketing)

University of Salford (England)

Hon. Diploma (Geography)

Hong Kong Baptist University