HSBC Bank Canada 1Q02 Results

HSBC Holdings PLC
15 April 2002

                                HSBC BANK CANADA

                    FIRST QUARTER 2002 RESULTS - HIGHLIGHTS



* Net income attributable to common shares was C$74 million for the quarter
ended 31 March 2002, an increase of 39.6 per cent over the comparative quarter
in 2001.

* Return on average common equity was 19.7 per cent for the quarter ended 31
March 2002 compared with 16.3 per cent for the quarter ended 31 March 2001.

* The cost:income ratio (excluding amortisation of goodwill and intangible
assets) improved to 52.0 per cent from 58.5 per cent in 2001.

* Total assets of C$33.9 billion at 31 March 2002 (C$31.1 billion at 31 March
2001).

* Funds under management were C$11.1 billion at 31 March 2002 compared to C$9.6
billion at 31 March 2001.



HSBC Bank Canada reports 39.6 per cent increase in net income attributable to
common shares


HSBC Bank Canada recorded net income attributable to common shares for the
quarter ended 31 March 2002 of C$74 million, 39.6 per cent higher than the first
quarter of 2001 and 51.0 per cent higher than the fourth quarter of 2001. Income
before taxes and non-controlling interest in income of subsidiaries was C$127
million for the quarter ended 31 March 2002 compared to C$100 million for the
first quarter of 2001 and C$81 million for the fourth quarter of 2001.

For the quarter ended 31 March 2002, the cost:income ratio, excluding
amortisation of goodwill and intangible assets, was 52.0 per cent compared to
58.5 per cent in the first quarter of 2001 and 63.3 per cent in the fourth
quarter of 2001.

Return on equity was 19.7 per cent for the quarter ended 31 March 2002, compared
to 16.3 per cent for the same period in 2001 and 13.3 per cent for the fourth
quarter of 2001.

Martin Glynn, president and chief executive officer of HSBC Bank Canada, said:
"We are pleased with the results for the first quarter of 2002, which were
achieved against a background of economic uncertainty. We continued to benefit
from our diversified business portfolio with improved income, excluding capital
market and trading revenues, across all lines of business.

"We achieved higher net interest income from a combination of increased loan
growth and wider spreads. The lower levels of capital market fees and trading
income reflected the relative uncertainties that exist in the equity markets.
Revenues from other businesses in the bank combined with our continued efforts
at controlling costs had a positive impact on net income for the quarter.

"We are excited by the potential of the North American alignment with HSBC Bank
USA. This much closer working relationship will take advantage of the strengths
of HSBC's operations in both Canada and the US. This will allow us to expand our
services to offer customers better access to finance, competitively priced
products and improved access to their money and financial information across
borders. The alignment will allow management to better generate increased
profitability through improved brand awareness, cost efficiencies, revenue
generation, distribution and risk management. HSBC is well positioned to be
known as North America's premier cross-border bank."

Financial Commentary


Net interest income


Net interest income for the first quarter of 2002 was C$211 million compared to
C$175 million in the first quarter of 2001 and C$197 million in the fourth
quarter of 2001. Net interest income increased in the first quarter of 2002 due
to lower funding costs and continued growth in residential mortgages as housing
market activity across Canada was spurred on by the low interest rate
environment.

Net interest margin, as a percentage of average interest earning assets, for the
first quarter of 2002 was 2.91 per cent compared with 2.64 per cent in the first
quarter of 2001 and 2.66 per cent in the fourth quarter of 2001. The net
interest margin benefited in the first quarter of 2002 from lower funding costs,
partly due to the prime lending rate in Canada dropping early in the quarter.

Other income

Other income was C$110 million in the first quarter of 2002 compared to C$102
million in the first quarter of 2001 and C$111 million in the fourth quarter of
2001. The increase of C$9 million in securitisation income reflected the
recognition of gains on sale of C$200 million of personal loans. Since 1 July
2001 gains, previously deferred and amortised to other income over the life of
the assets securitised, are recognised in other income immediately when the
relevant assets are securitised. The uncertainty in the global equity markets
continued to have a negative effect on capital market fees as revenues in the
first quarter of 2002 were lower than the first and fourth quarters of 2001.

Excluding capital market fees, trading revenues and securitisation income, other
income increased by 4.1 per cent over the first quarter of 2001 and was
comparable to income levels in the fourth quarter of 2001. Revenues from credit
fees increased by 25.0 per cent over the first quarter of 2001 and 7.1 per cent
over the fourth quarter of 2001 due to increased volumes in bankers'
acceptances, letters of credit and guarantees. Mutual fund management and other
administration fees increased by 25.0 per cent from the fourth quarter of 2001
due to increased net sales and increased market values of HSBC mutual funds in
the first quarter of 2002.

Non-interest expenses


Non-interest expenses were C$169 million in the quarter ended 31 March 2002
compared to C$164 million in the first quarter of 2001 and C$197 million in the
fourth quarter of 2001. Salaries and employee benefits in the fourth quarter of
2001 included C$9 million for costs associated with restructuring, and increased
performance-related compensation relating to higher levels of corporate finance
fees.

Provision for income taxes

The provision for income taxes was C$47 million compared with C$41 million in
the first quarter of 2001 and C$26 million for the fourth quarter of 2001. The
lower effective tax rate for the first quarter of 2002 reflects the lower tax
rates enacted in Canada when compared to the same quarter last year. The lower
effective tax rate in the fourth quarter of 2001 was partly due to a foreign tax
credit.

Credit quality and provision for credit losses

Overall credit quality remained sound during the first quarter of 2002
reflecting a consistent approach to credit granting and proactive loan
management. Provisions have been maintained at a level consistent with the
underlying risk portfolio and stage in the credit cycle.

The provision for credit losses was C$25 million for the first quarter of 2002
compared with C$13 million in the first quarter of 2001 and C$30 million in the
fourth quarter of 2001. The allowance for credit losses was in excess of
impaired loans by C$49 million at 31 March 2002 compared with C$33 million at 31
December 2001.


Balance sheet


Total assets at 31 March 2002 were C$33.9 billion compared with C$31.1 billion
at 31 March 2001 and C$33.3 billion at 31 December 2001. The growth in total
assets during the first quarter of 2002 was primarily due to the continued
growth in loans, particularly residential mortgages as a result of lower
financing costs and increased housing market activity across Canada.

Total deposits at 31 March 2002 were C$27.0 billion compared with C$24.8 billion
at 31 March 2001 and C$26.7 billion at 31 December 2001.

Funds under management

Funds under management were C$11.1 billion at 31 March 2002 compared with C$9.6
billion at 31 March 2001 and C$10.6 billion at 31 December 2001. The increase in
funds under management reflected strong net sales of HSBC mutual funds as well
as an increase in equity market values, which began in the fourth quarter of
2001 and continued into the first quarter of 2002.

Capital

The bank's tier 1 capital ratio was 8.7 per cent and the total capital ratio was
11.4 per cent at 31 March 2002. This compares with 8.5 per cent and 11.3 per
cent, respectively, at 31 March 2001 and 8.6 per cent and 11.3 per cent,
respectively, at 31 December 2001.

Dividends

A regular dividend of 39.0625 cents per share (totalling C$2 million) has been
declared on the Class 1 Preferred Shares - Series A. The dividend will be
payable in cash on 2 July 2002, the first business day after 30 June 2002, for
shareholders of record on 14 June 2002.

About HSBC Bank Canada

HSBC Bank Canada (TSE:HSB.PR.A), a subsidiary of HSBC Holdings plc, has more
than 160 offices. With over 7,000 offices in 81 countries and territories and
assets of US$696 billion at 31 December 2001, the HSBC Group is one of the
world's largest banking and financial services organisations. For more
information about HSBC Bank Canada and its products and services, visit our web
site at hsbc.ca.

Copies of HSBC Bank Canada's first quarter 2002 report will be sent to
shareholders during May 2002.

This document may contain forward-looking statements, including statements
regarding the business and anticipated financial performance of HSBC Bank
Canada. These statements are subject to a number of risks and uncertainties that
may cause actual results to differ materially from those contemplated by the
forward-looking statements. Some of the factors that could cause such
differences include legislative or regulatory developments, competition,
technological change, global capital market activity, changes in government
monetary and economic policies, changes in prevailing interest rates, inflation
levels and general economic conditions in geographic areas where HSBC Bank
Canada operates.


Figures in C$ millions                                                                Quarter ended
(except per share amounts)                                             31Mar02              31Dec01           31Mar01


Earnings
Net interest income                                                        211                  197               175
Income before taxes and non-controlling
 interest in subsidiaries                                                  127                   81               100
Net income                                                                  76                   51                55
Net income attributable to common shares                                    74                   49                53
Basic earnings per share                                                  0.16                 0.11              0.12

Financial ratios (%)
Return on average common equity                                           19.7                 13.3              16.3
Return on average assets                                                  0.89                 0.58              0.70
Net interest margin                                                       2.91                 2.66              2.64
Cost:income ratio *                                                       52.0                 63.3              58.5
Provision for credit losses:average loans
 and acceptances                                                          0.41                 0.48              0.24
Other income:total income ratio                                           34.3                 36.0              36.8

* Excluding amortisation of goodwill and intangible assets.


Figures in C$ millions                                            At 31Mar02             At 31Dec01        At 31Mar01

Financial position
Total assets                                                          33,850                 33,260            31,089
Total loans                                                           22,575                 21,870            20,751
Total deposits                                                        26,961                 26,707            24,841
Shareholders' equity                                                   1,699                  1,612             1,459

Total assets under administration
Funds under management                                                11,118                 10,559             9,634
Custodial assets under administration                                  2,302                  2,110             2,433

Capital ratios (%)
Total capital                                                           11.4                   11.3              11.3
Tier 1 capital                                                           8.7                    8.6               8.5



Consolidated Statement of Income (Unaudited)

Figures in C$ millions                                                    Quarter ended
(except per share amounts)                                     31Mar02              31Dec01                 31Mar01

Interest and dividend income
Loans                                                              299                  329                     378
Securities                                                          27                   30                      46
Deposits with regulated
 financial institutions                                             18                   22                      42
Total interest income                                              344                  381                     466

Interest expense
Deposits                                                          (125)                (176)                   (283)
Debentures                                                          (8)                  (8)                     (8)
Total interest expense                                            (133)                (184)                   (291)

Net interest income                                                211                  197                     175

Provision for credit losses                                        (25)                 (30)                    (13)
Net interest income after
 provision for credit losses                                       186                  167                     162

Other income
Deposit and payment service charges                                 17                   17                      16
Credit fees                                                         15                   14                      12
Capital market fees                                                 20                   28                      22
Mutual fund and administration fees                                 15                   12                      15
Foreign exchange                                                    12                   12                      12
Trade finance                                                        6                    6                       6
Trading revenue                                                      2                    2                       4
Securitization income                                               12                    5                       3
Other                                                               11                   15                      12
                                                                   110                  111                     102

Net interest and other income                                      296                  278                     264

Non-interest expenses
Salaries and employee benefits                                     (85)                 (98)                    (84)
Premises and equipment                                             (28)                 (31)                    (29)
Other                                                              (56)                 (68)                    (51)
Total non-interest expenses                                       (169)                (197)                   (164)

Income before taxes and non-controlling
 interest in income of subsidiaries                                127                   81                     100
Provision for income taxes                                         (47)                 (26)                    (41)
Non-controlling interest in income
 of subsidiaries                                                    (4)                  (4)                     (4)
Net income                                                          76                   51                      55
Preferred share dividends                                           (2)                  (2)                     (2)
Net income attributable to
 common shares                                                      74                   49                      53

Average common shares outstanding (000's)                      456,168              456,168                 456,168
Basic earnings per share                                          0.16                 0.11                    0.12



Condensed Consolidated Balance Sheet (Unaudited)
Figures in C$ millions                                     At 31Mar02              At 31Dec01              At 31Mar01

Assets
Cash and deposits with Bank of Canada                             352                     466                     411
Deposits with regulated financial institutions                  3,206                   3,261                   2,456
                                                                3,558                   3,727                   2,867

Investment securities                                           2,375                   2,474                   2,958
Trading securities                                              1,031                   1,153                     732
                                                                3,406                   3,627                   3,690

Assets purchased under
 reverse repurchase agreements                                    351                     428                     472

Loans
                                                               
    Businesses and government                                  11,959                  11,575                  12,000
                                                                
    Residential mortgage                                        8,766                   8,377                   7,043
                                                                
    Consumer                                                    2,181                   2,233                   2,003
                                                                 
    Allowance for credit losses                                  (331)                   (315)                   (295)

                                                               22,575                  21,870                  20,751

Customers' liability under acceptances                          2,560                   2,571                   1,979
Land, buildings and equipment                                     118                     124                     116
Other assets                                                    1,282                     913                   1,214
                                                                3,960                   3,608                   3,309
Total assets                                                   33,850                  33,260                  31,089



Liabilities and shareholders' equity
Deposits
                                                                
    Regulated financial institutions                            1,748                   1,747                     608
                                                               
    Individuals                                                13,530                  13,390                  12,620
                                                               
    Businesses and governments                                 11,683                  11,570                  11,613

                                                               26,961                  26,707                  24,841

Subordinated debentures                                           447                     447                     446

Acceptances                                                     2,560                   2,571                   1,979
Assets sold under repurchase agreements                            46                       7                      91
Other liabilities                                               1,907                   1,686                   2,043
Non-controlling interest in subsidiaries                          230                     230                     230
                                                                4,743                   4,494                   4,343
Shareholders' equity
                                                                  
    Preferred shares                                              125                     125                     125
                                                                  
    Common shares                                                 935                     935                     935
                                                                  
    Contributed surplus                                           165                     165                     165
                                                                  
    Retained earnings                                             474                     387                     234

                                                                1,699                   1,612                   1,459
Total liabilities and shareholders' equity                     33,850                  33,260                  31,089





Condensed Consolidated Statement of Cash Flows (Unaudited)
                                                                                    Quarter ended
Figures in C$ millions                                                  31Mar02            31Dec01            31Mar01
Cash flows provided by (used in):
Operating activities                                                         95                 76                241
Financing activities                                                        291                247              1,404
Investing activities                                                       (929)               (30)            (1,143)
(Decrease) increase in cash and
 cash equivalents                                                          (543)               293                502
Cash and cash equivalents,
 beginning of period                                                      3,138              2,845              2,338
Cash and cash equivalents,
 end of period                                                            2,595              3,138              2,840
Represented by:
Cash resources per balance sheet                                          3,558              3,727              2,867
 less non-operating deposits *                                             (963)              (589)               (27)
Cash and cash equivalents,
 end of period                                                            2,595              3,138              2,840

* Non-operating deposits are comprised primarily of cash which reprices after
90 days and cash restricted for recourse on securitisation transactions.



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