HSBC Bk Canada 3Q03 Results

HSBC Holdings PLC
20 October 2003

                                HSBC BANK CANADA

                    THIRD QUARTER 2003 RESULTS - HIGHLIGHTS

* Net income(^) was C$227 million for the nine months ended 30 September 2003,
  an increase of 16.4 per cent over the same period in 2002.

* Net income was C$81 million for the quarter ended 30 September 2003, an
  increase of 3.8 per cent over the third quarter of 2002.

* Return on average common equity was 19.3 per cent for the nine months ended 30
  September 2003 and 19.7 per cent for the quarter ended 30 September 2003.

* The cost:income ratio was 55.9 per cent for the nine months ended 30 September
  2003 and 55.3 per cent for the quarter ended 30 September 2003.

* Total assets of C$37.0 billion at 30 September 2003 compared to C$35.8 billion
  at 30 September 2002.

* Total assets under administration were C$17.5 billion at 30 September 2003, of
  which C$13.5 billion were funds under management and C$4.0 billion were 
  custody and administration accounts.

(^)  HSBC Bank Canada acquired Merrill Lynch HSBC Canada Inc. ('MLHSBC') on 31
     October 2002. For financial reporting, the income and expenses of MLHSBC 
     were accounted for effective 1 July 2002, the date on which the HSBC Group 
     acquired full ownership of MLHSBC, and were recorded in the results for the 
     fourth quarter of 2002.

Financial Commentary

HSBC Bank Canada recorded net income of C$81 million for the quarter ended 30
September 2003, an increase of 3.8 per cent, compared with C$78 million for the
third quarter of 2002. Net income for the nine months ended 30 September 2003
was C$227 million, an increase of C$32 million, or 16.4 per cent, compared with
C$195 million for the nine months ended 30 September 2002.

Commenting on the results, Lindsay Gordon, President and Chief Executive
Officer, Designate, said: "The results for the quarter were satisfactory given
the subdued economic conditions we experienced during the quarter. Net income
benefited from lower credit losses and higher non-interest income compared with
the same period in 2002. The continued improvement in equity markets encouraged
retail clients to trade more frequently and increased retail sharedealing
revenues.

"Historically low interest rates continued to provide stimulus for an active
housing market. Strong growth in residential mortgages and consumer loans
benefited net interest income. However, competitive pricing and increased
funding costs reduced the net interest margin. Credit losses in the quarter
decreased compared with the same period last year due to the improved credit
environment.

"With recent negative events such as the SARS outbreak, 'mad-cow' disease,
forest fires in British Columbia and the electricity blackout in Ontario largely
behind us, we are hopeful that consumer confidence will strengthen and provide
momentum for economic growth in Canada, although this is also dependent on the
continuing economic recovery in the US. With our broad range of services and
products to offer our clients in Canada, we are well positioned to take
advantage of any growth opportunities."

Net interest income

Net interest income for the quarter ended 30 September 2003 was C$213 million
compared with C$222 million for the third quarter of 2002. For the nine months
ended 30 September 2003, net interest income was C$653 million, an increase of
C$7 million, compared with C$646 million for the same period in 2002. Net
interest income continued to benefit from strong growth in residential mortgages
driven by low interest rates.

The net interest margin, as a percentage of average interest earning assets, for
the quarter ended 30 September 2003 was 2.58 per cent compared with 2.84 per
cent for the same period in 2002. For the nine months ended 30 September 2003,
the net interest margin was 2.71 per cent compared to 2.85 per cent for the nine
months ended 30 September 2002. During 2003, the net interest margin was
adversely affected by increased funding costs, as competitive pricing on
consumer deposits resulted in a change in funding mix towards higher cost
wholesale deposits, and competitive pricing on residential mortgages. In the
third quarter of 2003, the Bank of Canada overnight lending rate decreased
twice, each a 25 basis point drop, which partially resulted in a lower net
interest margin.

Other income

Other income for the quarter ended 30 September 2003 was C$127 million, an
increase of 21.0 per cent compared with C$105 million for the third quarter of
2002. Other income for the nine months ended 30 September 2003 was C$343
million, an increase of 7.9 per cent compared with C$318 million for the same
period in 2002.

Capital market fees were higher for the quarter and nine months ended 30
September 2003 compared with the same periods in 2002. Retail trading
commissions in MLHSBC were C$6 million and C$15 million, respectively, for the
quarter and nine months ended 30 September 2003. Retail trading commissions
increased as equity markets improved in the second and third quarters of 2003.
However, the restructuring of the institutional equity business in the second
quarter of 2002 impacted comparability as fees from corporate finance activities
were lower in 2003 compared with the same periods in 2002. The recent
improvement in the equity markets has not yet boosted retail investor activity
in mutual funds. As a result, mutual fund and administration fees were lower for
the quarter and nine months ended 30 September 2003 compared with the same
periods in 2002. Securitization income was higher in the third quarter of 2003
due to a C$11 million gain on the securitization of C$300 million of personal
loans.

Non-interest expenses

Non-interest expenses for the quarter ended 30 September 2003 were C$188 million
compared with C$165 million for the third quarter of 2002. Non-interest expenses
for the nine months ended 30 September 2003 were C$557 million compared with
C$539 million for the same period in 2002. The second quarter of 2002 included a
C$28 million restructuring charge related to the withdrawal from institutional
equity trading, sales and research activities. Non-interest expenses for the
quarter and nine months ended 30 September 2003 included C$6 million and C$18
million, respectively, from MLHSBC.

Salaries and benefits were higher in the quarter and nine months ended 30
September 2003 compared with the same periods in 2002. Included in salary costs
were C$2 million and C$5 million, respectively, relating to MLHSBC. The bank
implemented the fair value method of accounting for stock based compensation on
a prospective basis and recorded C$2 million in salaries and benefits in the
third quarter of 2003. Variable compensation costs were higher for the quarter
and nine months ended 30 September 2003 compared with the same periods in 2002
due, in part, to increased capital market fees and foreign exchange income. On a
year to date basis, employee medical costs were higher in 2003 compared with the
same period in 2002.

Premises and equipment and other non-interest expenses were higher for the
quarter and nine months ended 30 September 2003 compared with the same periods
in 2002 largely from MLHSBC costs of C$4 million and C$13 million, respectively.
Computer costs related to improving delivery channels and the infrastructure of
the bank's networks increased in the quarter and nine months ended 30 September
2003. These increases were partially offset by lower operating losses for the
nine months ended 30 September 2003 compared with the same period in 2002.

Provision for income taxes

The effective tax rate for the quarter ended 30 September 2003 was 39.6 per cent
compared with 37.1 per cent for the third quarter of 2002. For the nine months
ended 30 September 2003, the effective tax rate was 39.3 per cent compared with
37.3 per cent for the same period in 2002. The higher effective tax rate in 2003
reflected lower levels of tax-exempt investment income compared to 2002.

Credit quality and provision for credit losses

The provision for credit losses for the quarter ended 30 September 2003 was C$14
million compared with C$34 million for the same period in 2002. For the nine
months ended 30 September 2003, the provision for credit losses was C$53 million
compared with C$102 million in the same period of 2002. The reductions are
attributable to the improving credit environment in Canada. In addition, the
higher provision level in 2002 related to an exposure in the telecommunications
sector. While the ongoing performance of our loan portfolios is satisfactory, we
remain cautious in the face of an uneven economic recovery, particularly in the
United States.

Total impaired loans decreased C$96 million, or 30.3 per cent, to C$221 million
at 30 September 2003 compared with C$317 million at 30 September 2002. Impaired
loans, after deducting specific allowances for credit losses, were C$145 million
at 30 September 2003 compared with C$170 million at 30 September 2002.

The general allowance for credit losses was C$254 million at 30 September 2003
compared to C$226 million at the same time last year. The increase was in line
with the growth in the total loan and bankers' acceptances portfolios over the
same period.

Balance sheet

Total assets at 30 September 2003 were C$37.0 billion, up C$1.8 billion from
C$35.2 billion at 31 December 2002. Continued historical low interest rates have
benefited consumers resulting in residential mortgages and consumer loans
growing a total of C$1.1 billion from 31 December 2002. Commercial advances also
benefited from lower rates as bankers' acceptances increased C$0.6 billion over
the same period.

Total deposits increased C$0.7 billion from C$28.4 billion at 31 December 2002
to C$29.1 billion at 30 September 2003. Commercial deposits increased C$1.1
billion while personal deposits decreased C$0.4 billion over the same period,
largely from the negative impact on US dollar based deposits resulting from the
stronger Canadian dollar relative to the US dollar.

Funds under management

Funds under management were C$13.5 billion at 30 September 2003 compared with
C$12.4 billion at 30 June 2003 and C$11.2 billion at 30 September 2002. The
increase in the third quarter of 2003 benefited from improvement in equity
markets during the period. On a year to date basis, improvements in the equity
markets, tempered partially by strengthening of the Canadian dollar relative to
the US dollar, in the second and third quarters had a positive effect on funds
under management.

Capital ratios

The tier 1 capital ratio was 8.3 per cent and the total capital ratio was 11.0
per cent at 30 September 2003. This compares with 8.3 per cent and 11.3 per
cent, respectively, at 30 September 2002 and 8.0 per cent and 10.9 per cent,
respectively, at 30 June 2003.

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 31 December 2003, for shareholders of record on 15 December
2003.

About HSBC Bank Canada

HSBC Bank Canada (HSB.PR.A - TSX), a subsidiary of HSBC Holdings plc, has more
than 160 offices. With over 9,500 offices in 79 countries and territories and
assets of US$983 billion at 30 June 2003, the HSBC Group is one of the world's
largest banking and financial services organisations. For more information about
HSBC Bank Canada and our products and services, visit our website at hsbc.ca.

HSBC Bank Canada's third quarter 2003 report will be sent to shareholders during
November 2003.

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.

Summary
                                                        Quarter ended                               Nine months ended
Figures in C$ millions                    30Sep03          30Jun03            30Sep02           30Sep03          30Sep02
(except per share amounts)

Earnings
Net income                                     81               73                 78               227              195
Basic earnings per share                     0.17             0.15               0.17              0.47             0.41

Performance ratios (%)
Return on average common
  equity                                     19.7             19.1               20.1              19.3             16.5
Return on average assets                     0.85             0.79               0.86              0.82             0.73
Net interest margin                          2.58             2.76               2.84              2.71             2.85
Cost:income ratio                            55.3             57.1               50.5              55.9             55.9
Other income:total income ratio              37.4             33.3               32.1              34.4             33.0


Credit information
Impaired loans                                221              246                317
Allowance for credit losses
  - Balance at end of period                  330              338                373
  - As a percentage of impaired
    loans                                     149 %            137 %              118 %
  - As a percentage of loans
    outstanding                              1.31 %           1.36 %             1.54 %

Average balances
Assets                                     36,874           36,275             35,196            36,253           34,517
Loans                                      24,764           24,322             23,293            24,352           22,768
Deposits                                   29,251           28,732             28,291            28,819           27,589
Common equity                               1,582            1,505              1,502             1,532            1,532

Capital ratios (%)
Tier 1                                        8.3              8.0                8.3
Total capital                                11.0             10.9               11.3

Total assets under administration(^)
Funds under management                     13,455           12,447             11,193
Custodial accounts                          4,055            3,388              3,142
Total assets under administration          17,510           15,835             14,335
     
(^)  Balances as at 30 September 2002 are restated to eliminate inter-company 
     holdings of assets.


Consolidated Statement of Income (Unaudited)
                                                     Quarter ended                              Nine months ended
Figures in C$ millions                    30Sep03       30Jun03           30Sep02           30Sep03           30Sep02
(except per share amounts)

Interest and dividend income
Loans                                         347           352               322             1,032               939
Securities                                     22            30                26                80                81
Deposits with regulated
  financial institutions                       14            14                26                41                58
Total interest income                         383           396               374             1,153             1,078

Interest expense
Deposits                                      161           165               142               473               406
Debentures                                      9             9                10                27                26
Total interest expense                        170           174               152               500               432

Net interest income                           213           222               222               653               646

Provision for credit losses                    14            19                34                53               102
Net interest income after
  provision for credit losses                 199           203               188               600               544

Other income
Deposit and payment service charges            20            20                20                60                55
Credit fees                                    18            17                15                51                46
Capital market fees                            26            22                15                64                50
Mutual fund and administration fees            13            13                15                39                45
Foreign exchange                               15            15                15                44                40
Trade finance                                   7             7                 7                20                20
Trading revenue                                 3             2                 3                 8                10
Securitization income                          16             3                 3                24                17
Other                                           9            12                12                33                35
Total other income                            127           111               105               343               318

Net interest and other income                 326           314               293               943               862

Non-interest expenses
Salaries and employee benefits                 97            95                86               279               254
Premises and equipment                         27            28                23                84                78
Other                                          64            67                56               194               179
Restructuring costs                             -             -                 -                 -                28
Total non-interest expenses                   188           190               165               557               539

Income before taxes and non-
 controlling interest in income of
 trust                                        138           124               128               386               323
Provision for income taxes                     53            47                46               147               116
Non-controlling interest in income
  of trust                                      4             4                 4                12                12
Net income                                     81            73                78               227               195
Preferred share dividends                       2             2                 2                 6                 6
Net income attributable to
  common shares                                79            71                76               221
                                                                                                                  189


Average common shares
  outstanding (000)                       471,168       471,168           456,168           471,168           456,168
Basic earnings per share (C$)                0.17          0.15              0.17              0.47              0.41

Condensed Consolidated Balance Sheet (Unaudited)
Figures in C$ millions                                     At 30Sep03              At 31Dec02              At 30Sep02

Assets
Cash and deposits with Bank of Canada                             353                     417                     353
Deposits with regulated financial institutions                  3,718                   3,317                   3,340
                                                                4,071                   3,734                   3,693

Investment securities                                           2,326                   2,875                   2,286
Trading securities                                                768                     870                   1,142
                                                                3,094                   3,745                   3,428

Assets purchased under
  reverse repurchase agreements                                 1,020                     416                     939

Loans
   Businesses and government                                   11,954                  11,949                  12,342
   Residential mortgage                                        10,708                   9,809                   9,554
   Consumer                                                     2,588                   2,422                   2,320
   Allowance for credit losses                                   (330)                   (311)                   (373)
                                                               24,920                  23,869                  23,843

Customers' liability under acceptances                          2,926                   2,374                   2,563
Land, buildings and equipment                                     102                     111                     104
Other assets                                                      898                     940                   1,193
                                                                3,926                   3,425                   3,860
Total assets                                                   37,031                  35,189                  35,763

Liabilities and shareholders' equity
Deposits
   Regulated financial institutions                               749                     758                   1,866
   Individuals                                                 13,993                  14,432                  14,052
   Businesses and governments                                  14,338                  13,182                  12,391
                                                               29,080                  28,372                  28,309

Subordinated debentures                                           509                     528                     548

Acceptances                                                     2,926                   2,374                   2,563
Assets sold under repurchase agreements                           120                      28                      87
Other liabilities                                               2,420                   1,984                   2,362
Non-controlling interest in trust and subsidiary                  230                     230                     230
                                                                5,696                   4,616                   5,242
Shareholders' equity
   Preferred shares                                               125                     125                     125
   Common shares                                                  950                     950                     935
   Contributed surplus                                            167                     165                     165
   Retained earnings                                              504                     433                     439
                                                                1,746                   1,673                   1,664
Total liabilities and shareholders' equity                     37,031                  35,189                  35,763


Condensed Consolidated Statement of Cash Flows (Unaudited)
                                                   Quarter ended                                 Nine months ended
Figures in C$ millions                 30Sep03        30Jun03          30Sep02             30Sep03            30Sep02
Cash flows (used in)/
provided by:
  Operating activities                    (202)          687              402                 860                743
  Financing activities                     908          (168)               9                 644              1,626
  Investing activities                    (422)         (583)            (938)             (1,324)            (2,333)
Increase/(decrease) in cash
and
  cash equivalents                         284           (64)            (527)                180                 36
Cash and cash equivalents,
  beginning of period                    3,533         3,597            3,701               3,637              3,138
Cash and cash equivalents,
  end of period                          3,817         3,533            3,174               3,817              3,174
Represented by:
  Cash resources per balance
     sheet                               4,071         4,084            3,693
     less non-operating                   (254)         (551)            (519)
deposits(^)
  Cash and cash equivalents,
     end of period                       3,817         3,533            3,174

(^)  Non operating deposits are comprised primarily of cash which reprices after
     90 days and cash restricted for recourse on securitization transactions.


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