MELVIN Teo says he does not mind devoting 16 hours a day to work himself but he prefers his employees to get a life and go home when office hours end.

Hard work has paid off for the chief executive officer of DBS Bank (China) Ltd, the Chinese mainland arm of Southeast Asia's biggest bank by assets. Earlier this year, Teo was named "Promising Young Banker under 40" by financial services firm The Asian Banker.

Under his leadership, profit at the Chinese mainland subsidiary of the Singapore-based bank rose 160 percent year on year in the first half of this year to US$47 million, surpassing its full-year profit in 2010.

Deposits at DBS China jumped almost 40 percent in the first half of the year, largely due to a shift in strategy, working with more state-owned enterprises and high-quality privately owned enterprises in China, as well as the transfer of about 6,000 retail Royal Bank of Scotland clients with assets under management of about US$500 million.

DBS China, which first entered the mainland market with a representative branch in 1993, currently operates nine branches and 14 sub-branches on the mainland. It has opened seven outlets this year and expects to add two more before the year's end.

Despite rapid expansion, the bank continues to characterize its China strategy as prudent, even conservative. In the aftermath of the global financial crisis, the bank opened only three branches between 2008 and 2010.

Teo said this is the era of Asia and he is confident of stronger growth from China. Within 10 years, China's contribution as a percentage of DBS Group's profits is expected to double to about 10 percent from current's 4 percent to 5 percent.

Teo joined DBS in 2005 after holding senior positions with Standard Chartered Bank and Bank of America. He was appointed manager for China operations in January 2010 after serving as DBS head of private equity.

Teo talked with Shanghai Daily in an exclusive one-hour interview in his office in the DBS Building in the Lujiazui financial area overlooking Shanghai's historic Bund.

For an admitted workaholic, Teo maintains a tidy office with no overt signs of the piles of documents that mark his heavy workload.

Q: DBS accelerated its expansion aggressively in China this year after a few relatively conservative years. Why the change?

A: The early years really were to set the foundations for expansion. For any business, particularly banking, it is important you get your controls, processes and foundations on solid ground. That's what we did from 2007 to 2009.

In 2010, when I took over, we began to ride the benefits of those foundations. We started to develop a clearer strategy that we could execute and to grow much faster in terms of the cities where we wanted to go, and within each city, the number of outlets we wanted to develop. It appears that we suddenly have picked up pace, but I think you must understand that we were basically laying the foundations before we accelerated growth.

Q: Do you see this more rapid expansion continuing in the next few years?

A: DBS Group's board of directors and top management met in Beijing in September to set our 10-year strategy. We have reaffirmed our strategy to focus on China and to grow our business and franchise here.

Q: In other words, we should expect no slowdown of expansion from DBS in the following years despite concerns of a global double-dip recession and slower growth in China.

A: Yes. When we look at investing in a country, we look out 10 to 15 years, or even longer. It is not like trading on the stock market. We are committed to long-term investment in China.

In that business horizon, we are not going to be deterred by short-term market volatility or shifts. This is in line with the group's thinking. We are not going to be detracted from that by short-term fluctuations.

Q: DBS has more than doubled its China workforce to 1,400 since your local incorporation. What are your hiring plans looking forward?

A: On average every year in the next three to five years, we are looking to add about 600 staff. The key challenge is whether we can find the right people or not.

Q: Your bank has shown strong growth this year. How will you maintain growth in the coming years against a relatively bleak global economic outlook and China's own economic challenges?

A: If we look back at 2010, that was also a difficult year for us, but we still managed quite significant growth. This year arguably is an even more difficult year, but we also managed to produce very good results.

The key first is to have a well-defined strategy and a very cohesive management team as well as staff in China to carry out that strategy. The devil is always in the detail. The team and staff ensure the strategy is executed well. We work as one team in one company. The market environment has always been difficult, but as long as the team remains cohesive, I am quite confident that we will have a good second half and a good 2012.

Q: What's your stress test result on the property price correction?

A: There are talks on stress tests of housing prices falling 30 percent or 50 percent. I think at either level, we are okay. We remain very comfortable with our real estate exposure.

Q: You talk of expanding DBS's retail business at the full steam. But we know that institutional banking has been the major profit generator for banks. Is that also true in your case?

A: Institutional banking, together with treasury business, contributed to a significant proportion of DBS China's profits. We are looking at a 10-year horizon for consumer banking. It does take a longer time for the consumer banking side to show positive results. We are here to build a business that will last. This year, we will add nine outlets. Next year, we hope to maintain similar momentum. Every year, we are committed to growing our franchise in China.

Q: Are you breaking even in consumer banking?

A: No. We are still in the stage of investment. We only started our consumer banking business in China in 2005. I don't think any foreign bank has broken even on consumer banking yet.

Q: You said you look at consumer banking on a 10-year horizon. Does that mean you expect consumer banking to make money, or at least break even, in that period?

A: Our internal analysis show that the business can break even within 10 years. But that's not a key driver for me. The key is that we want to invest in consumer banking to provide a more holistic banking experience for our clients in China and, in that process, build a lasting and comprehensive franchise in China.

Q: DBS has helped clients to issue yuan-denominated bonds offshore. DBS group has no plans itself to issue yuan bonds offshore. But does DBS China have plans to issue yuan bonds in Shanghai? If so, why?

A: Yes, but at an opportune time. First, we want to support government and regulators in their efforts to broaden or deepen the yuan market onshore. Second, we want to diversify our funding sources. We have already met the regulatory requirement to cap our loan-to-deposit ratio below 75 percent ahead of the regulatory deadline. So it's not for liquidity concerns, but for the reasons I have just outlined.

Q: DBS was one of the first foreign banks to set up a private-equity investment vehicle in China in March 2009, with an onshore fund equivalent to US$100 million. But so far, you haven't tapped the fund. Why is that?

A: We set up the business because we want to seize the potential of the Chinese economy. Secondly, we want to locate our people closer to the ground to understand the real life dynamics. We haven't invested in any company so far under this vehicle. You may think it's slow, but it's similar to the way we have built up our banking franchise in China. We want to ensure we really understand the market. It's our philosophy to make sure that we have a proper learning curve. We observe and we learn about a market before we enter it. We first opened an office for the business in Shanghai. In the middle of this year, we opened an office in Beijing for the same business. It tells you that we are comfortable with what we are gathering about the market.

Q: You work long hours every day, but you don't like your employees to work overtime. Why is that?

A: It's not because I'm trying to save the bank some overtime staff cost but rather that I believe people need to have a balanced lifestyle. I don't think it's healthy to work overtime and sacrifice time that should be spent with family or friends. We are not here for a sprint or a 100-meter competition. We are here to run a marathon. To do that, people must pace themselves to sustain over the next 10 to 20 years. If you press people to work overtime, they get burned out quickly.

Q: But as the captain of this marathon team, you personally seem to be running at the speed of a short-distance sprinter.

A: I really love my job! I normally get to the office at 7am, and leave around 9pm or 10pm. And when I go home, it doesn't mean I stop working. Sometimes I work at home until 1am or 2am. The hours are rather long. I don't look at my watch. There's just so much I want to do every day. That may be peculiar to myself. I don't expect the same from my staff because not everybody works the same way.

Biography

Melvin Teo

Executive Director and Chief Executive Officer

DBS Bank (China) Ltd

Teo is chairman of the China Management Committee, chairman of the China Asset & Liability Committee, chairman of the China Market Risk Committee at DBS and a member of DBS Group Holdings management committee. Prior to this, he was the head of private equity for DBS Bank with overall responsibility for the group's PE business.

Teo joined DBS Bank in July 2005.

Prior to joining DBS Bank, Teo held a number of senior positions at Standard Chartered Bank in Singapore, Hong Kong and London as well as at Bank of America.

A Singaporean, Teo graduated from the Nanyang Technological University with a Bachelor Degree (First Class Honors) in Business (Banking).