HSBC Canada 3Q02 Results

HSBC Holdings PLC
24 October 2002


                                HSBC BANK CANADA

                    THIRD QUARTER 2002 RESULTS - HIGHLIGHTS

*Net income was C$195 million for the nine months ended 30 September 2002, an
increase of 19.6 per cent from C$163 million in the same period of 2001.

*Net income was C$78 million for the quarter ended 30 September 2002, an
increase of 36.8 per cent from C$57 million in the third quarter of 2001.

*Return on average common equity was 16.5 per cent for the nine months ended 30
September 2002 and 20.1 per cent for the quarter ended 30 September 2002.

*The cost:income ratio (excluding amortisation of goodwill and intangible
assets) was 55.3 per cent for the nine months ended 30 September 2002 and 49.8
per cent for the quarter ended 30 September 2002, compared with 57.9 per cent
and 56.7 per cent for the respective periods in 2001.

*Total assets of C$35.8 billion at 30 September 2002 compared to C$32.6 billion
at 30 September 2001.

*Total assets under administration were C$14.1 billion at 30 September 2002, of
which C$10.0 billion were funds under management and C$4.1 billion were custody
and administration accounts.

Financial Commentary

HSBC Bank Canada recorded net income of C$195 million for the nine months ended
30 September 2002, an increase of C$32 million, or 19.6 per cent, from C$163
million for the nine months ended 30 September 2001. Net income for the quarter
ended 30 September 2002 was C$78 million compared to C$57 million for the third
quarter of 2001, an increase of 36.8 per cent. The increase was primarily
attributed to higher net interest income and a lower effective tax rate,
partially offset by a larger credit loss provision.

Martin Glynn, President and Chief Executive Officer, said: "Net interest income
continues to be strong and benefited from continued growth in our residential
mortgage portfolio and higher net interest margins during the quarter. We are
encouraged that revenue from our non-market sensitive lines of business has
continued to grow. However, weakness in the equity markets has continued to
dampen our capital market revenues relative to the prior year comparative
periods.

"Provisions for credit losses were higher in the third quarter of 2002 compared
to the third quarter of last year but were lower than the second quarter of
2002. Overall, underlying credit quality remains strong and we remain adequately
provisioned.

"From a customer perspective, there have already been many success stories where
HSBC clients, from both sides of the border, have benefited as a result of our
North American alignment. We are striving to provide our customers with seamless
cross-border service and products they should expect from a truly North American
bank. This will clearly differentiate us from our competitors and strengthen the
reputation of HSBC as 'The world's local bank'.

"I would like to take this opportunity to thank our staff for their high quality
work and continued efforts to maintain our excellent customer service and good
results during uncertain international economic conditions."

Net interest income

Net interest income for the third quarter of 2002 was C$222 million, an increase
of C$26 million, or 13.3 per cent, from C$196 million in the third quarter of
2001. For the nine months ended 30 September 2002 net interest income was C$646
million, an increase of 16.0 per cent from C$557 million in the comparative
period of 2001.

HSBC Bank Canada continues to benefit from lower funding costs, due in part to
the lower interest rate environment in 2002. In addition, the residential
mortgage portfolio continued to show strong growth as the housing market in
Canada remained robust. The net interest margin widened to 2.84 per cent for the
quarter ended 30 September 2002 compared with 2.76 per cent for the same period
in 2001.

Other income

Other income was C$105 million in the third quarter of 2002 compared to C$102
million in the third quarter of 2001. For the nine months ended 30 September
2002, other income was C$318 million compared to C$308 million for the same
period in 2001. Other income for the third quarter benefited from higher fees
generated in our merchant banking business. This was partially offset by the
negative impact on capital market fees, resulting from the continuing
uncertainty in global equity markets and the restructuring of the institutional
equity business announced in the second quarter of this year.

Excluding capital market fees, trading revenue and securitisation income, other
income from the bank's other lines of business increased 7.7 per cent for the
quarter ended 30 September 2002 compared to the same period in 2001.

Non-interest expenses

Non-interest expenses were C$165 million in the quarter ended 30 September 2002
compared to C$171 million in the third quarter of 2001. For the nine months
ended 30 September 2002, non-interest expenses were C$539 million compared to
C$507 million for the same period in 2001. As a result of the prior
restructuring, salaries and benefits were lower in the third quarter of 2002
compared to the same quarter in 2001. Variable compensation was higher in the
third quarter of 2002 compared to the second quarter of 2002, partially due to
the increased merchant banking fees this quarter.

Continued cost containment measures have resulted in a significant decrease in
the cost:income ratio. The cost:income ratio, excluding amortisation of goodwill
and intangible assets, for the third quarter of 2002 was 49.8 per cent compared
to 56.7 per cent for the same period in 2001.

Provision for income taxes

The provision for income taxes was C$46 million for the third quarter of 2002
compared to C$42 million for the same quarter in 2001. On a year-to-date basis,
the provision for income taxes was C$116 million in 2002 compared to C$121
million in 2001. The lower effective tax rate in 2002 reflects lower tax rates
in Canada compared to the prior year.

Credit quality and provision for credit losses

The provision for credit losses was C$34 million in the third quarter of 2002
compared to C$24 million in the third quarter of 2001. For the nine months ended
30 September 2002, the provision for credit losses was C$102 million compared to
C$62 million for the same period in 2001. The higher provision levels in 2002
reflect an exposure to the telecommunications sector. While the provision was
higher compared to the same period in 2001, it was lower compared to the C$43
million in the second quarter of 2002.

Balance sheet

Total assets at 30 September 2002 were C$35.8 billion, up C$2.5 billion from
C$33.3 billion at 31 December 2001. Loans increased by C$2.0 billion to C$23.8
billion due primarily to a C$1.2 billion increase in residential mortgages, net
of securitisations, and C$0.8 billion in loans to businesses and governments.

Total deposits increased C$1.6 billion from C$26.7 billion at 31 December 2001
to C$28.3 billion at 30 September 2002. Deposits from individuals grew C$0.7
billion to C$14.1 billion and businesses and government deposits increased by
C$0.8 billion to C$12.4 billion over the same period.

Total assets under administration

Funds under management were C$10.0 billion at 30 September 2002 compared to
C$10.5 billion at 30 June 2002 and C$9.0 billion at 30 September 2001. Including
custody and administration balances, total assets under administration were
C$14.1 billion compared with C$14.7 billion at 30 June 2002.

Capital ratios

The bank's tier 1 capital ratio was 8.3 per cent and the total capital ratio was
11.3 per cent at 30 September 2002. This compares with 8.3 per cent and 10.9 per
cent, respectively, at 30 September 2001 and 8.1 per cent and 11.1 per cent,
respectively, at 30 June 2002.

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 2002, for shareholders of record on 13 December
2002.

About HSBC Bank Canada

HSBC Bank Canada (HSB.PR.A - TSX), a subsidiary of HSBC Holdings plc, has more
than 160 offices. With some 7,000 offices in 81 countries and territories and
assets of US$746 billion at 30 June 2002, 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 website at hsbc.ca.

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

Summary
                                                          Quarter ended                             Nine months ended
Figures in C$ millions                     30Sep02         30Jun02          30Sept01           30Sept02         30Sept01
(except per share amounts)

Earnings
Net income                                      78              41                57                195              163
Basic earnings per share                      0.17            0.09              0.12               0.41             0.34

Performance ratios (%)
Return on average common equity               20.1            10.1              15.5               16.5             15.5
Return on average assets                      0.86            0.45              0.68               0.73             0.67
Net interest margin                           2.84            2.82              2.76               2.85             2.70
Cost:income ratio(^)                          49.8            64.2              56.7               55.3             57.9
Other income:total income ratio               32.1            32.6              34.2               33.0             35.6

(^)Excluding amortisation of goodwill and intangible assets.

Credit information
Impaired loans                                 317             347               266
Allowance for credit losses
 - Balance at end of period                    373             359               318
 - As a percentage of impaired loans           118 %           103 %             120 %
 - As a percentage of loans outstanding       1.54 %          1.53 %            1.40 %

Average balances
Assets                                      35,196          34,598            31,976             34,517           31,244
Loans                                       23,293          22,885            22,383             22,768           20,928
Deposits                                    28,291          27,738            25,854             27,589           25,200
Common equity                                1,502           1,563             1,410              1,532            1,360

Capital ratios (%)
Tier 1                                         8.3             8.1               8.3
Total capital                                 11.3            11.1              10.9

Total assets under administration (^)(^)
Funds under management                      10,034          10,495             9,005
Custodial accounts                           4,080           4,210             2,172
Total assets under administration           14,114          14,705            11,177

(^)(^)Amounts prior to 30 September 2002 have been restated to eliminate inter-company holdings of assets.

Consolidated Statement of Income (Unaudited)
                                                    Quarter ended                            Nine months ended
Figures in C$ millions                    30Sept02       30Jun02          30Sept01         30Sept02         30 Sept01
(except per share amounts)

Interest and dividend income
Loans                                          322           318               368              939             1,119
Securities                                      26            28                36               81               123
Deposits with regulated
 financial institutions                         26            14                27               58               101
Total interest income                          374           360               431            1,078             1,343

Interest expense
Deposits                                       142           139               227              406               762
Debentures                                      10             8                 8               26                24
Total interest expense                         152           147               235              432               786

Net interest income                            222           213               196              646               557

Provision for credit losses                     34            43                24              102                62
Net interest income after
 provision for credit losses                   188           170               172              544               495

Other income
Deposit and payment service charges             20            18                17               55                50
Credit fees                                     15            16                14               46                39
Capital market fees                             15            15                18               50                64
Mutual fund and administration fees             15            15                15               45                45
Foreign exchange                                15            13                13               40                37
Trade finance                                    7             7                 7               20                18
Trading revenue                                  3             5                 3               10                11
Securitisation income                            3             2                 3               17                10
Other                                           12            12                12               35                34
Total other income                             105           103               102              318                08

Net interest and other income                  293           273               274              862               803

Non-interest expenses
Salaries and employee benefits                  86            83                90              254               261
Premises and equipment                          23            27                25               78                84
Other                                           56            67                56              179               162
Restructuring costs                              -            28                 -               28                 -
Total non-interest expenses                    165           205               171              539               507

Income before taxes and non-
 controlling interest in income of trust       128            68               103              323               296
Provision for income taxes                      46            23                42              116               121
Non-controlling interest in income
 of trust                                        4             4                 4               12                12
Net income                                      78            41                57              195               163
Preferred share dividends                        2             2                 2                6                 6
Net income attributable to
 common shares                                  76            39                55              189
                                                                                                                  157


Average common shares
 outstanding (000's)                       456,168       456,168           456,168          456,168           456,168
Basic earnings per share ($)                  0.17          0.09              0.12             0.41              0.34

Condensed Consolidated Balance Sheet (Unaudited)
                                                          At 30Sept02              At 31Dec01             At 30Sept01

Figures in C$ millions

Assets
Cash and deposits with Bank of Canada                             353                     466                     335
Deposits with regulated financial institutions                  3,340                   3,261                   2,772
                                                                3,693                   3,727                   3,107

Investment securities                                           2,286                   2,474                   2,383
Trading securities                                              1,142                   1,153                     954
                                                                3,428                   3,627                   3,337

Assets purchased under
 reverse repurchase agreements                                    939                     428                     364

Loans
 Businesses and government                                     12,342                  11,575                  12,554
 Residential mortgage                                           9,554                   8,377                   7,977
 Consumer                                                       2,320                   2,233                   2,158
 Allowance for credit losses                                     (373 )                  (315 )                  (318 )
                                                               23,843                  21,870                  22,371

Customers' liability under acceptances                          2,563                   2,571                   2,113
Land, buildings and equipment                                     104                     124                     116
Other assets                                                    1,193                     913                   1,220
                                                                3,860                   3,608                   3,449
Total assets                                                   35,763                  33,260                  32,628

Liabilities and shareholders' equity
Deposits
 Regulated financial institutions                               1,866                   1,747                   1,520
 Individuals                                                   14,052                  13,390                  13,110
 Businesses and governments                                    12,391                  11,570                  11,835
                                                               28,309                  26,707                  26,465

Subordinated debentures                                           548                     447                     446

Acceptances                                                     2,563                   2,571                   2,113
Assets sold under repurchase agreements                            87                       7                       -
Other liabilities                                               2,362                   1,686                   1,811
Non-controlling interest in trust and subsidiary                  230                     230                     230
                                                                5,242                   4,494                   4,154
Shareholders' equity
 Preferred shares                                                 125                     125                     125
 Common shares                                                    935                     935                     935
 Contributed surplus                                              165                     165                     165
 Retained earnings                                                439                     387                     338
                                                                1,664                   1,612                   1,563
Total liabilities and shareholders' equity                     35,763                  33,260                  32,628


Condensed Consolidated Statement of Cash Flows (Unaudited)

                                                   Quarter ended                               Nine months ended
Figures in C$ millions                30Sept02       30Jun02         30Sept01            30Sept02            30Sept01
Cash flows provided by/(used in):
 Operating activities                      402           246             (365 )               743                 (42 )
 Financing activities                        9         1,326            1,787               1,626               2,933
 Investing activities                     (938 )        (466 )           (955 )            (2,333 )            (2,384 )
(Decrease)/increase in cash and
 cash equivalents                         (527 )       1,106              467                  36                 507
Cash and cash equivalents,
 beginning of period                     3,701         2,595            2,378               3,138               2,338
Cash and cash equivalents,
 end of period                           3,174         3,701            2,845               3,174               2,845
Represented by:
 Cash resources per balance sheet        3,693         4,275            3,107
  less non-operating                      (519 )        (574 )           (262 )
deposits(^)
 Cash and cash equivalents,
  end of period                          3,174         3,701            2,845

(^) 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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