HSBC FY05 REL1;Pt 2/4

HSBC Holdings PLC
06 March 2006


     2004            Year ended 31Dec                         2005
     US$m                                               US$m          £m           HK$m

            For the year
   18,943   Profit before tax                         20,966      11,531        163,073
            Profit attributable to shareholders of    
   12,918    the parent company                       15,081       8,295        117,300
    6,932   Dividends                                  7,750       4,263         60,280
            At year-end
   85,522   Total shareholders' equity                92,432      53,704        716,718
   90,780   Capital resources                        105,449      61,266        817,652
  777,127   Customer accounts and deposits by banks  809,146     470,112      6,274,118
1,279,974   Total assets                           1,501,970     872,645     11,646,275
  759,210   Risk-weighted assets                     827,164     480,582      6,413,830

      US$   Per share                                    US$           £            HK$
     1.18   Basic earnings                              1.36        0.75          10.58
     1.17   Diluted earnings                            1.35        0.74          10.50
     0.63   Dividends^                                  0.69        0.38           5.36
     7.66   Net asset value                             8.16        4.74          63.27

            Share information
   11,172m  US$0.50 ordinary shares in issue          11,334m
   US$190bn Market capitalisation                     US$182bn
    £8.79   Closing market price per share             £9.33
                                                      Over 1      Over 3         Over 5
                                                        year       years          years
            Total shareholder return to 31Dec05^^      111.3       158.8          121.2
            Benchmarks: FTSE 100                       120.8       158.4          105.9
                        MSCI World                     123.1       159.1           99.1

^  The fourth interim dividend for 2005 of US$0.31 per share is translated at the
   closing rate on 31 December 2005 (see note 11 on page 28). Where required, this
   dividend will be converted into sterling or Hong Kong dollars at the exchange
   rates on 2 May 2006 (see Note 2 on page 16). Under IFRSs accounting rules, 
   the dividend per share of US$0.69 shown in the accounts is the total of the 
   dividends declared during 2005. This represents the fourth interim dividend 
   for 2004 and the first, second and third interim dividends for 2005. As the 
   fourth interim dividend for 2005 was declared in 2006 it will be reflected in the 
   accounts for 2006.
^^ Total shareholder return ('TSR') is as defined in the Annual Report and
   Accounts 2005 on page 220.

     2004                  Year ended 31 Dec                              2005

            Performance ratios (%)

     15.0   Return on average invested capital^                           15.9

     16.3   Return on average total shareholders' equity                  16.8

     1.14   Post-tax return on average total assets                       1.06

     2.13   Post-tax return on average risk-weighted assets               2.01

            Efficiency and revenue mix ratios

     51.6   Cost efficiency ratio                                         51.2

            As a percentage of total operating income:

     55.5   - Net interest income                                         50.8

     23.1   - Net fee income                                              23.4

      5.0   - Net trading income                                           9.5

            Capital ratios

      8.9   - Tier 1 capital                                               9.0

     12.0   - Total capital                                               12.8

^  Return on invested capital is based on the profit attributable to ordinary
   shareholders. Average invested capital is measured as average total
   shareholders' equity after adding back goodwill previously written-off directly
   to reserves, deducting average equity preference shares issued by HSBC Holdings
   and deducting/(adding) average reserves for unrealised gains/(losses) on
   effective cash flow hedges and available-for-sale securities. This measure reflects
   capital initially invested and subsequent profit.

Consolidated Income Statement

        31Dec04                                                         Year ended 31Dec05
           US$m                                                     US$m           £m         HK$m

         50,471      Interest income                           60,094       33,052      467,411
        (19,372)     Interest expense                         (28,760)     (15,817)    (223,694)
         31,099      Net interest income                       31,334       17,235      243,717
         15,902      Fee income                                17,486        9,617      136,006
         (2,954)     Fee expense                               (3,030)      (1,666)     (23,567)
         12,948      Net fee income                            14,456        7,951      112,439
                     Trading income excluding net interest      
          2,786       income                                    3,656        2,011       28,436
              -      Net interest income on trading activities  2,208        1,214       17,174
          2,786      Net trading income                         5,864        3,225       45,610
              -      Net income from financial instruments      
              -       designated at fair value                  1,034          569        8,042
                     Net investment income on assets backing        
          1,012       policyholders' liabilities                    -            -            -
                     Gains less losses from financial              
            540       investments                                 692          381        5,382
            622      Dividend income                              155           85        1,206
          5,368      Net earned insurance premiums              5,436        2,990       42,280
          1,613      Other operating income                     2,733        1,502       21,256
         55,988      Total operating income                    61,704       33,938      479,932

                     Net insurance claims incurred and         
         (4,635)      movement in policyholders' liabilities   (4,067)      (2,237)     (31,633)
                     Net operating income before loan          
                      impairment charges and other credit
         51,353       risk provisions                          57,637       31,701      448,299
                     Loan impairment charges and other         
         (6,191)      credit risk provisions                   (7,801)      (4,290)     (60,677)
         45,162      Net operating income                      49,836       27,411      387,622

        (14,523)     Employee compensation and benefits       (16,145)      (8,880)    (125,576)
         (9,739)     General and administrative expenses      (11,183)      (6,150)     (86,977)
                     Depreciation of property, plant and       
         (1,731)      equipment                                (1,632)        (898)     (12,694)
           (494)     Amortisation of intangible assets           (554)        (305)      (4,309)
        (26,487)     Total operating expenses                 (29,514)     (16,233)    (229,556)
         18,675      Operating profit                          20,322       11,178      158,066
                     Share of profit in associates and joint      
            268       ventures                                    644          353        5,010
         18,943      Profit before tax                         20,966       11,531      163,076
         (4,685)     Tax expense                               (5,093)      (2,800)     (39,616)
         14,258      Profit for the year                       15,873        8,731      123,460
                     Profit attributable to shareholders of    
         12,918       the parent company                       15,081        8,295      117,300
                     Profit attributable to minority              
          1,340       interests                                   792          436        6,160

Consolidated Balance Sheet

  At 31Dec04                                                          At 31Dec05
        US$m                                                 US$m          £m           HK$m

               ASSETS

       9,944   Cash and balances at central banks          13,712       7,967        106,323
       6,338   Items in the course of collection from      11,300       6,565         87,620
                other banks
               Hong Kong Government certificates of        
      11,878    indebtedness                               12,554       7,294         97,344
     122,160   Trading assets                             190,257     110,539      1,475,251
               Trading assets which may be repledged or    
           -    resold by counterparties                   42,652      24,781        330,724
           -   Financial assets designated at fair value   15,046       8,742        116,667
      32,190   Derivatives                                 73,928      42,952        573,238
     143,449   Loans and advances to banks                125,965      73,186        976,733
     672,891   Loans and advances to customers            740,002     429,941      5,737,975
     185,332   Financial investments                      176,301     102,431      1,367,038
               Financial investments which may be           
           -    repledged or resold by counterparties       6,041       3,510         46,842
       3,441   Interests in associates and joint ventures   7,249       4,212         56,209
      34,495   Goodwill and intangible assets              33,200      19,289        257,433
      15,624   Property, plant and equipment               15,206       8,835        117,907
      23,077   Other assets                                26,596      15,452        206,225
      19,155   Prepayments and accrued income              11,961       6,949         92,746
   1,279,974   Total assets                             1,501,970     872,645     11,646,275

  At 31Dec04                                                          At 31Dec05
        US$m                                                 US$m          £m           HK$m

               LIABILITIES AND EQUITY

               Liabilities
      11,878   Hong Kong currency notes in                 12,554       7,294         97,344
                circulation
      84,055   Deposits by banks                           69,727      40,511        540,663
     693,072   Customer accounts                          739,419     429,601      5,733,455
               Items in the course of transmission to       
       5,301    other banks                                 7,022       4,080         54,449
      46,460   Trading liabilities                        174,365     101,306      1,352,024
               Financial liabilities designated at fair   
           -    value                                      61,829      35,923        479,422
      34,988   Derivatives                                 74,036      43,015        574,075
     211,721   Debt securities in issue                   188,072     109,271      1,458,310
       6,475   Retirement benefit liabilities               4,869       2,829         37,754
      20,581   Other liabilities                           26,515      15,405        205,597
               Liabilities under insurance contracts       
           -    issued                                     14,144       8,218        109,673
               Liabilities to policyholders under   
      19,190    long-term assurance business                    -           -              -
      16,499   Accruals and deferred income                12,689       7,372         98,391
               Provisions 
       1,435   - Deferred tax                                 530         308          4,110
       2,636   - Other provisions                           1,436         834         11,135
      26,486   Subordinated liabilities                    16,537       9,608        128,228
   1,180,777   Total liabilities                        1,403,744     815,575     10,884,630

               Equity
       5,587   Called up share capital                      5,667       3,293         43,942
       4,881   Share premium account                        6,896       4,007         53,472
      25,622   Other reserves                              23,646      13,738        183,351
      49,432   Retained earnings                           56,223      32,666        435,953
      85,522   Total shareholders' equity                  92,432      53,704        716,718
      13,675   Minority interests                           5,794       3,366         44,927
      99,197   Total equity                                98,226      57,070        761,645
   1,279,974   Total equity and liabilities             1,501,970     872,645     11,646,275

Consolidation Statement of Recognised Income and Expense

        2004                             Year ended 31Dec                               2005
        US$m                                                                            US$m

                Available-for-sale investments:
           -      - Fair value losses taken to equity                                   (400)
           -      - Fair value gains transferred to income statement on disposal 
                      or impairment                                                     (240)
                Cash flow hedges:
           -      - Fair value changes taken to equity                                   (92)
           -      - Fair value changes transferred to income statement                  (106)
           -    Share of changes in equity of associates and joint ventures              161
                Exchange differences arising on net investments in foreign                  
       3,720      operations                                                          (4,257)
        (731)   Actuarial losses on post-employment benefits                            (812)
       2,989                                                                          (5,746)
         319    Net deferred tax on items taken directly to equity                       437
      14,258    Profit for the year                                                   15,873
      17,566    Total recognised income and expense for the year                      10,564

                Effect of change in accounting policy
                IFRSs transition adjustment at 1 January 2005
           -      - Available-for-sale fair value reserve                              1,919
           -      - Cash flow hedging reserve                                            410
           -      - Foreign exchange reserve                                             686
           -      - Retained earnings                                                 (1,762)
           -      - Minority interests                                               (10,077)
      17,566                                                                           1,740

                Total recognised income and expense for the year attributable to:
      15,743      - Shareholders of the parent company                                 9,912
       1,823      - Minority interests                                                   652
      17,566                                                                          10,564



Consolidated Cash Flow Statement
                                                                           Year ended 31Dec
                                                                         2005          2004
                                                                         US$m          US$m
Cash flows from operating activities
Profit before tax                                                      20,966        18,943
Adjustments for:
Non-cash items included in net profit                                   1,358           368
Change in operating assets                                            (82,710)     (124,299)
Change in operating liabilities                                        70,933       178,014
Elimination of exchange differences                                     2,315        (8,664)
Net gain from investing activities                                       (692)         (540)
Share of profits in associates and joint ventures                        (644)         (268)
Dividends received from associates                                        114           127
Tax paid                                                               (4,619)       (3,784)
Net cash from operating activities                                      7,021        59,897

Cash flows from investing activities
Purchase of financial investments                                    (378,103)     (330,917)
Proceeds from the sale of financial investments                       368,696       315,437
Purchase of property, plant and equipment                              (2,887)       (2,830)
Proceeds from the sale of property, plant and equipment                   620           371
Purchase of intangible assets                                            (849)         (108)
Net cash outflow from acquisition of and increase in stake of               
 subsidiaries                                                          (1,662)       (2,431)
Net cash inflow from disposal of subsidiaries                             705            27
Net cash outflow from acquisition of and increase in stake of        
 associates                                                            (2,569)       (2,122)
Proceeds from disposal of associates                                      422           212
Net cash used in investing activities                                 (15,627)      (22,361)

Cash flows from financing activities
Issue of ordinary share capital                                           690           581
Issuance of preference shares                                           1,298             -
Net purchases and sales of own share for market-making purposes           (55)           98
Purchases of own shares to meet share awards and share option awards     (766)         (345)
Own shares released on vesting of share awards and exercise of options    277           159
Decrease in non-equity minority interests                                   -         1,480
Subordinated loan capital issued                                        2,093         6,021
Subordinated loan capital repaid                                       (1,121)       (1,740)
Dividends paid to the shareholders of the parent company               (5,935)       (4,425)
Dividends paid to minority interests - equity                            (508)         (664)
                                     - non-equity                           -          (548)
Net cash (used in)/from financing activities                           (4,027)          617
Net(decrease)/increase in cash and cash equivalents                   (12,633)       38,153
Cash and cash equivalents at 1 January                                160,956       117,558
Exchange differences in respect of cash and cash equivalents           (7,016)        5,245
Cash and cash equivalents at 31December                               141,307       160,956


Additional Information

1. Accounting policies

For all periods up to and including the year ended 31 December 2004, HSBC
prepared its consolidated financial statements in accordance with UK Generally
Accepted Accounting Principles ('UK GAAP'). From 1 January 2005, HSBC has
prepared its consolidated financial statements in accordance with International
Financial Reporting Standards ('IFRSs') as endorsed by the EU and effective for
HSBC's reporting for the year ended 31 December 2005.

In preparing its consolidated financial statements, HSBC has elected to take
advantage of certain transitional provisions within IFRS 1 'First-time Adoption
of International Financial Reporting Standards' ('IFRS 1') which offer exemption
from presenting comparative information or applying IFRSs retrospectively. The
most significant of these provisions is the exemption from presenting
comparative information in accordance with IAS 32 'Financial Instruments:
Presentation', IAS 39 'Financial Instruments: Recognition and Measurement', IFRS
4 'Insurance Contracts' and disclosures under IFRS 7 'Financial Instruments:
Disclosure'.

IFRSs accounting policies applicable to the consolidated financial statements
can be found in Notes 1 and 2 of the Annual Report and Accounts.

2. Dividend

On 6 March 2006, the Directors declared a fourth interim dividend for 2005 of
US$0.31 per ordinary share. The dividend will be payable on 11 May 2006, to
shareholders on the Register at the close of business on 24 March 2006. The
dividend will be payable in cash, in US dollars, sterling or Hong Kong dollars,
or a combination of these currencies, at the exchange rates quoted by HSBC Bank
plc in London at or about 11 am on 2 May 2006, and with a scrip dividend
alternative. Particulars of these arrangements will be mailed to shareholders on
or about 4 April 2006, and elections will be required to be made by 27 April
2006. As this dividend was declared after the balance sheet date, it has not
been included in 'Other liabilities' at 31 December 2005.

The dividend on shares held through Euroclear France, the settlement and central
depositary system for Euronext Paris, will be payable on 11 May 2006 to the
holders of record on 24 March 2006. The dividend will be payable in cash, in
euros at the exchange rate on 2 May 2006, or as a scrip dividend. Particulars of
these arrangements will be announced through Euronext Paris on 22 March 2006 and
29 March 2006.

The dividend on American Depositary Shares ('ADSs'), each of which represents
five ordinary shares, will be payable on 11 May 2006 to holders of record on 24
March 2006. The dividend of US$1.55 per ADS will be payable in cash in US
dollars or as a scrip dividend of new ADSs. Particulars of these arrangements
will be mailed to holders on or about 31 March 2006, and elections will be
required to be made by 17 April 2006. Alternatively, the cash dividend may be
invested in additional ADSs for participants in the dividend reinvestment plan
operated by the depositary.

The Company's shares will be quoted ex-dividend in London, Hong Kong and Bermuda
on 22 March 2006 and in Paris on 27 March 2006. The ADSs will be quoted
ex-dividend in New York on 22 March 2006.








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