H'hold Integration 1 Yr Later

HSBC Holdings PLC
30 March 2004


                     HOUSEHOLD INTEGRATION - ONE YEAR LATER

The following is the text of an internal circular being issued today regarding
the integration of Household International which was acquired one year ago.

BUSINESS AREAS

Auto Finance
   •Thanks to HSBC's worldwide reputation, eBay Inc., the world's largest
    Internet auctioneer, partners with Household Auto Finance to offer vehicle
    loans on its Web site.
   •HBUS is now using Household's automatic decisioning technology, reducing
    response times to customers from 1.5 hours to 33 seconds.

Consumer Lending
   •A new near prime loan product has been developed and nearly 7,000 have
    been sold across all HFC and Beneficial branches.
   •A new prime loan product has also been successfully piloted in HFC and
    Beneficial branches.

Credit Cards
   •Major projects on track to convert the UK (June), Mexico (July) and the
    U.S. (October) to WHIRL (Worldwide Household International Retail Lending
    System) 8.0 during 2004.

Insurance
   •HSBC and Household cross-sell products across customer bases and develop
    first co-branded insurance promotion - renters coverage and pet insurance.
   •Household's credit insurance and debt cancellation product expertise is
    shared across the Group (e.g., Brazil and Mexico).

Mortgage
   •Cross-referral initiatives are developed between the HSBC distribution
    channels and Household (Refer Up/Refer Down program).
   •Using lower funding and new products, Household Mortgage Services has
    grown its near prime portfolio customer base to $4.1 billion (172 percent)
    over the last 12 months.
   •Approximately $4 billion in mortgage services assets have been
    transferred to HSBC.

Retail Services
   •Retail Services introduced to 32 customers of HSBC (CIB & CMB) and new
    propositions are being developed with some major businesses.
   •Private-label merchant partners are attracted to HSBC's worldwide
    presence and reputation.

SUPPORT AREAS

Call Centers
   •Integration initiatives eliminated the need for a planned Household $3
    million equipment spend.

Communication
   •External PR agencies have been consolidated from four to two.
   •Launch of Stronger Together, the online newsletter detailing integration
    updates across the company.
   •Launch of new combined internal media: NewsLink and VideoLink.

Corporate And Commercial Banking
   •A number of lending opportunities have occurred with businesses
    introduced by HI Retail Services.

Credit Risk
   •$7.4 million saved over five years through renegotiated Group-wide card
    processing contracts.
   •$4 million saved over three years through renegotiated fraud prevention
    contracts.
   •$1 million saved in credit bureau contracts over two years.
   •Series of visits and forums undertaken to share best practice, perform
    due diligence on acquisition proposals, and formulate Group-wide credit
    system and policy integration.

Finance
   •The impact of Household's lower funding costs is the most significant
    financial benefit of the integration with HSBC. Household has received more
    than $14 billion in direct funding from HSBC and its clients.

Facilities/Property
   •Success in standardizing processes - more than $1 million saved in 2003
    by improving lease audits and tax certification.
   •Decision made to proceed with outsourcing pilot for 20 percent of
    Household's facilities management.
   •Rationalizing facilities has produced savings of $70,000 in 2003 with
    projected 2004 savings of $1.4 million.

Home Office
   •Bill Aldinger brings HSBC North America leadership together at the first
    combined North American Leadership Conference in Sept 2003. A second
    conference is scheduled for May 2004.
   •HSBC and Household political action committees are merged.

Human Resources
   •Career Banding adopted by all North American employees.
   •HSBC North America moves to one common payroll system and payroll call
    centers are combined.
   •All Household and HBUS travel operations are combined.
   •Employee medical, dental and vision plans are combined, resulting in a
    rate saving of $19 million.

Item Processing
   •HSBC is now Household's settlement bank in Pomona, Hanover and
    Schaumburg.
   •HSBC is now clearing for Household loans and corporate applications.

Marketing and Branding
   •A corporate marketing group is formed and a brand study is conducted.
   •Household corporate and most Household business units will begin
    operating under HSBC later this year.

Policy and Compliance
   •All commitments to regulators have been implemented to agreed timescales.

Purchasing
   •All North America purchasing activity is consolidated.
   •Forty major vendor relationships renegotiated, with annual savings in
    excess of $40 million.

Refund Lending
   •HSBC provides Household's funding requirements, resulting in significant
    savings.
   •The HSBC brand is opening up opportunities to offer a variety of products
    via Household's relationship with tax preparers.

Technology
   •All HBUS and Household technology employees are joined in a single
    operating unit.
   •North America now coordinates all HSBC global technology for WHIRL credit
    cards and PeopleSoft.
   •Four major credit card system conversions scheduled to complete in 2004.
   •Twenty-nine different initiatives are on track to deliver nearly $100
    million savings per year by 2005.

Canada
   •HSBC/HFC Canada Auto Finance businesses are combined to provide prime and
    non-prime propositions through an instant auto financing system.
   •Good success in cross selling to HBCA and HFC's respective Commercial
    Banking and Retail Services client base.

Mexico
   •US and Mexico teams have started a cross border Electronic Money Transfer
    (EMT) pilot using the Pay Direct product.

UK
   •A number of support functions, including Purchasing & Property, are
    integrated.
   •HFC Bank won the John Lewis Partnership private label business on the
    strength of the HSBC brand.
   •Numerous cross-sell initiatives are progressing, including the Marbles
    card offering to HSBC customers and Premier and Mortgage mailing to 'high
    score' HFC Bank customers.

SHARING HOUSEHOLD BEST PRACTICES ACROSS THE GROUP

   •Household's best practices in Cards, Credit Management, Retail Services,
    Technology and Consumer Finance M&A are being shared across many parts of
    the Group.
   •Specific action plans are being implemented in Brazil and Mexico to
    introduce Household's best practices. Early success includes a 20 percent
    improvement in Collections' productivity in Brazil.
   •Key managers visit Hong Kong and Japan to identify opportunities to
    leverage Household's consumer finance skills.
   •HFC UK have helped train four secondees from HSBC India, helped launch
    cards in Turkey and Greece, and are progressing opportunities in other
    countries, e.g., Czech Republic.
   •A career development program is being developed to facilitate sharing
    best practices across the Group.

FINANCIAL SUMMARY TO DATE

At the 12-month anniversary, we are well on track to achieve our integration
target of $1 billion in annual savings from funding benefits and $200 million
from other synergy benefits by 2005.



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