HSBC Holdings plc pt 1/3

HSBC Holdings PLC
30 July 2007

                                HSBC HOLDINGS PLC
                        2007 INTERIM RESULTS - HIGHLIGHTS


• Total operating income up 23 per cent to US$42,092 million (US$34,334
  million in the first half of 2006).

For the half-year:

• Net operating income up 14 per cent to US$32,147 million (US$28,295
  million in the first half of 2006).

• Group pre-tax profit up 13 per cent to US$14,159 million (US$12,517
  million in the first half of 2006).

• Profit attributable to shareholders of the parent company up 25 per
  cent to US$10,895 million (US$8,729 million in the first half of 2006).

• Return on average invested capital of 18.4 per cent (17.2 per cent in
  the first half of 2006).

• Basic earnings per ordinary share up 22 per cent to US$0.95 (US$0.78 in
  the first half of 2006).

Dividend and capital position:

• Second interim dividend for 2007 of US$0.17 per ordinary share which,
  together with the first interim dividend for 2007 of US$0.17 per ordinary share
  already paid, represents an increase of 13 per cent over the first and second
  interim dividends for 2006.

• Tier 1 capital ratio of 9.3 per cent and total capital ratio of 13.2
  per cent.

HSBC HOLDINGS REPORTS PRE-TAX PROFIT OF US$14,159 MILLION

HSBC made a profit before tax of US$14,159 million, an increase of US$1,642
million, or 13 per cent, over the first half of 2006.

Net interest income of US$18,230 million was US$1,499 million, or 9 per cent,
higher than the first half of 2006.

Net operating income before loan impairment charges and other credit risk
provisions of US$38,493 million was US$6,308 million, or 20 per cent, higher
than the first half of 2006.

Operating expenses of US$18,611 million rose US$2,472 million, or 15 per cent,
compared with the first half of 2006. On an underlying basis and expressed in
terms of constant currency, operating expenses increased by 10 per cent.

HSBC's cost efficiency ratio was 48.3 per cent compared with 50.1 per cent in
the first half of 2006.

Loan impairment charges and other credit risk provisions were US$6,346 million
in the first half of 2007, US$2,456 million higher than the first half of 2006.

The tier 1 capital and total capital ratios for the Group remained strong at 9.3
per cent and 13.2 per cent, respectively, at 30 June 2007.

The Group's total assets at 30 June 2007 were US$2,150 billion, an increase of
US$290 billion, or 16 per cent, since 31 December 2006.

Geographical distribution of results

Profit before tax
                                                   Half-year to
                                30Jun07                 30Jun06                 31Dec06
                       US$m           %        US$m           %        US$m           %

Europe                4,050        28.6       3,600        28.8       3,374        35.3
Hong Kong             3,330        23.5       2,654        21.2       2,528        26.4
Rest of Asia-Pacific  3,344        23.6       1,657        13.2       1,870        19.5
North America         2,435        17.2       3,741        29.9         927         9.7
Latin America         1,000         7.1         865         6.9         870         9.1

                     14,159       100.0      12,517       100.0       9,569       100.0

Tax expense          (2,645)                 (3,272)                 (1,943)

Profit for the year  11,514                   9,245                   7,626

Profit attributable 
  to shareholders of 
  the parent 
  company            10,895                   8,729                   7,060
Profit attributable 
  to minority 
  interests             619                     516                     566

Distribution of results by customer group

Profit before tax
                                                  Half-year to
                                 30Jun07               30Jun06                 31Dec06
                        US$m           %        US$m         %         US$m          %

Personal Financial      
  Services             4,729        33.4       5,908      47.2        3,549       37.1
Commercial Banking     3,422        24.2       2,862      22.9        3,135       32.8
Corporate, Investment
  Banking and Markets  4,158        29.4       3,144      25.1        2,662       27.8
Private Banking          780         5.5         600       4.8          614        6.4
Other                  1,070         7.5           3         -         (391)      (4.1)

Total                 14,159       100.0      12,517     100.0        9,569      100.0

Statement by Stephen Green, Group Chairman

HSBC produced record results for the first half of 2007, delivering profit
before tax of US$14.2 billion, up 13 per cent, and earnings per share of
US$0.95, up 22 per cent.

The Directors have approved a second interim dividend of US$0.17 per share,
which will be payable on 4 October 2007 with a scrip alternative, in accordance
with our planned schedule of quarterly dividends.

The results were driven by excellent performances across Asia, and in Corporate,
Investment Banking and Markets ('CIBM'), and Commercial Banking, which offset
the impact of higher consumer finance impairment charges in the US and a
challenging environment for our personal business in Europe.

Our results benefited from two specific items. First, we recognised a gain of
US$1 billion in attributable profit, as a result of the dilution of our holdings
in our mainland China associates. Excluding this exceptional gain, profit before
tax rose by 5 per cent and attributable profit by 13 per cent. Second, our
effective tax rate was unusually low at 18.7 per cent in this period. The
following commentary excludes the impact of the dilution gain.

Revenues grew by US$5.2 billion, or 16 per cent, against cost growth of US$2.5
billion, or 15 per cent, contributing to an improved cost-efficiency ratio of
49.7 per cent.

Asia drove profit growth, with Hong Kong ahead by 25 per cent and the Rest of
Asia-Pacific by 37 per cent. Latin America and Europe delivered results ahead of
the prior year period by 16 per cent and 13 per cent respectively. As expected,
North America was lower by 35 per cent as a consequence of higher impairment
reserves. It is worth noting that our results for the first half of 2006
benefited from exceptionally low impairment charges in the US as a result of
changes in US bankruptcy law.

At a customer group level, Commercial Banking delivered pre-tax profits 20 per
cent ahead of last year, and both CIBM and Private Banking were at least 30 per
cent ahead. Our Personal Financial Services businesses in Asia also delivered
very strong results, with pre-tax profits 38 per cent ahead of the interim stage
last year. However, pre-tax profits in Personal Financial Services as a whole
declined 20 per cent overall compared with the first half of 2006, owing to
challenging conditions in the UK and to the weaknesses we have already
highlighted in our US correspondent mortgage business. The actions taken to
restructure and manage down our exposure in this business are progressing well.
The charge for impairments was lower than in the second half of last year and,
importantly, was in line with our expectations.

Within these results, the Group's Insurance operations made a significant
contribution and we see insurance as a growth opportunity for the future.

From a strategic perspective, these results illustrate the value we are creating
from our position as the world's largest and most profitable international
emerging markets bank, and from our unique global reach which allows us to act
as a bridge between developed and developing markets for our customers.

The strong growth we achieved in operating revenues reflects our focus on
seeking out growth markets and has allowed us to continue to invest in organic
expansion while maintaining a strong capital position and growing dividends to
shareholders.

Average invested capital rose by US$17 billion as we pursued expansion
opportunities around the world. Our tier one capital ratio remained strong at
9.3 per cent. We see this as a competitive advantage, particularly in the
current economic environment, and in light of the opportunities we see to deploy
this capital within our businesses.

In an increasingly globalised world, the success we have reported today is
supported by the integrity that is part of our global brand, and which we
believe constitutes a distinct competitive advantage. In less than a decade, we
have made 'HSBC' the 23rd most valuable brand in the world, according to
Interbrand, and we are the fastest growing financial services brand. We will
continue to invest in developing our brand and the experience it promises for
the customers and communities we serve around the world. We will also extend our
brand to new markets and new business streams.

As I set out earlier this year, we are refocusing our business to make the most
of the opportunities presented by three major trends that are reshaping the
world economy. First, emerging markets are growing faster than mature economies.
Second, world trade is growing significantly faster than world GDP. Third,
longevity is increasing around the world.

As a result, we have positioned our business so that it is broadly balanced
between Asia, Latin America, the Middle East and other developing economies, and
slower-growing developed economies. As the world economy evolves, and trade and
investment flows from and into emerging markets expand, HSBC has an excellent
platform for growth. It is the linkages between our business operations across
83 countries and territories which deliver unique revenue opportunities and a
distinctive competitive position. Increasing longevity is also creating
opportunities to grow our insurance and retirement businesses. All these factors
contributed to the growth we delivered in the first half of 2007.

I want to thank all my colleagues for their contribution to these results. Our
progress is clear evidence of the value we are delivering through our strategy
of joining up the company for our customers, our shareholders and our people.

As the world's local bank, our responsibilities extend beyond how successfully
we run our business. Climate change is one of the most significant issues of our
time, which is why we announced in May the US$100 million HSBC Climate
Partnership, working with four world-class organisations to support initiatives
by individuals, businesses and governments around the world to address this
issue. I am also delighted that Sir Nicholas Stern - author of the Stern Report
on the economics of climate change - has agreed to become an adviser on economic
development and climate change to HSBC.

Outlook

The world economy remains remarkably buoyant. There is growing evidence of
economic decoupling, with US weakness not constraining economic activity
elsewhere. Even in the US, which faces considerable housing and
sub-prime-related difficulties, consumer spending has remained encouragingly
robust and the labour market has been firm. The financial markets continue to
enjoy record levels of activity, though muted in the past couple of months by
nervousness about credit markets, and more sophisticated product structuring and
risk management services are enabling the diversification and spread of risk on
an unprecedented scale. This buoyancy is supporting economic activity.

We estimate that global growth this year will be close to last year's 3.8 per
cent. We believe emerging markets will remain particularly strong, stimulating
global demand for capital goods, providing an economic boost to Germany, Japan
and other major exporters. The weakness in the housing market is likely to hold
back US growth for 2007, which may be as low as 2 per cent.

There are risks, however. Excess liquidity in global financial markets could
lead to further asset price dislocation. Perceptions of risk can change very
rapidly, affecting both credit spreads and liquidity, and history shows that
when market participants simultaneously seek to adjust risk exposures, market
instability can follow. Among the potential triggers are higher global interest
rates with a return to higher inflation, moves towards protectionism and greater
spillover effects from US housing market weakness. HSBC has always emphasised 
balance sheet strength to maintain strong liquidity and a sound capital base to 
take advantage of opportunities that arise in such circumstances. We remain 
cautious in our risk appetite.

Our strategy is clear. We have well diversified earnings by both geography and
customer. Our distribution network provides compelling opportunities for serving
our customers around the world. We will continue to improve both customer
experience and operating efficiency through technology, especially in our direct
channels. The outlook for HSBC is buoyed by our expectation of continuing strong
growth in our developing markets businesses and their greater linkages 
internationally. We are on a journey with great opportunities to build on our
strong current position, and I look forward to reporting our future progress.

Review by Michael Geoghegan, Group Chief Executive

Our first half results demonstrate sustainable growth and significant progress
in working through the challenges of sub prime lending, whilst also unlocking
real value from our world class distribution network through Joining Up The
Company.

The world's largest and most profitable international emerging markets bank

Our emerging markets operations continue to perform exceptionally well. We
prioritise investment in growing these businesses organically and we continue to
extract value from strategic investments - this month our integration of Grupo
Banistmo continued as we rebranded operations to HSBC in five Latin American
countries.

We have a strong presence in the world's most dynamic economies. In the BRIC
countries - forecast to account for 40 per cent of world growth by 2025 - we are
the largest international bank in mainland China, the second largest and growing
impressively in India, and the third largest in Brazil. In Russia, we received a
banking licence in May to start retail banking activities.

Joining up the company for our customers

The breadth of our international network means we can offer our customers
compelling global propositions that cannot be matched by purely domestic or
regional competitors. Increasingly, we are joining up our businesses for our
customers across borders and across businesses. Our CIBM business achieved
record results for the period by successfully executing its emerging markets-led
and financing-focused strategy. Our Commercial Banking business also grew
strongly as customers benefited from our international orientation and the
direct channels we are building for them.

Personal Financial Services profit before tax declined by 20 per cent, largely
as a consequence of our experience with sub-prime correspondent mortgages in the
US and weakness in the UK. Meanwhile in Asia, pre-tax profit grew 38 per cent.

We are increasingly connecting this business globally and in May rolled-out in
35 countries our market-leading Premier proposition - a signature account for
international HSBC Premier customers. First indications are encouraging and
there is an opportunity to gain significant global market share in this valuable
segment. We believe that, over time, we will add four million new mass-affluent
customers.

Private Banking achieved very strong results and continued to leverage closer
links with other customer groups, particularly Commercial Banking, generating
almost US$2 billion in total client assets from referrals. When our investment
business recently launched the first multi-manager Chinese equity fund in Hong
Kong, we were able to raise over US$1 billion from our retail and private
banking customer base in the region.

We also benefit from the ability to deliver global world-class propositions for
our customers through the effective use of our technology. By building core
systems for use across the Group, we can share the development and support costs
across our operations, close down old systems, and share best practice in sales
and service.

In our cards business, the introduction of our Whirl global credit card platform
across the world, which now services 86 million accounts across 16 countries,
has allowed us to improve services for our card customers and to cut our IT
costs per account by 16 per cent. We are adding 40,000 credit card customers to
the system each day.

We are also introducing a new personal and business internet platform across the
Group. This has been implemented in 25 countries so far. Internet sales have
risen 68 per cent compared to the first half of 2006. The new infrastructure is
allowing us to launch new services, including direct banking. Following earlier
successes in the US and Taiwan, HSBC Direct, our online direct banking and
savings proposition, was launched in South Korea and Canada during the first
half of 2007. In Asia, the service has attracted over 120,000 customers, with
total savings balances exceeding US$900 million. The US business has continued
to perform strongly; online savings balances have now reached US$12 billion with
over 225,000 new accounts added this year. One of the compelling features of the
HSBC Direct model is that it allows us to attract new customers who we do not
reach through our existing channels. We continue to develop the HSBC Direct
model, with a view to rolling it out in other markets.

In Latin America, we are introducing HSBC's systems into the newly-acquired
Grupo Banistmo companies, starting with Panama. We are also implementing HSBCnet
throughout Latin America to provide a full cash management system across
the region.

Number one international bank in Asia

We produced record results in Asia. Profit before tax grew impressively in all
our major markets, with our operations in Hong Kong up by 25 per cent, our
businesses in mainland China by 69 per cent, in India by 39 per cent, in
Indonesia by 115 per cent, in Malaysia by 13 per cent and in Singapore by 44 per
cent.

Hong Kong produced very strong results. As a result of its leading position in
wealth management, our business there was well-positioned to benefit from the
buoyant stock market activity during the period and the steady flow of mainland
China companies listing on the Hong Kong Stock Exchange. We also continued to
leverage our position as the leading financial institution in Hong Kong in trade
finance and in insurance. Increased foreign investment through Hong Kong into
mainland China boosted Hong Kong's services and property sectors, and provided
further opportunities for HSBC to generate revenue growth.

Strong domestic interest in stock market investments within mainland China also
encouraged listings on the Shanghai Stock Exchange during this period, and our
three associates, Bank of Communications, Ping An Insurance and Industrial Bank,
all successfully raised new capital. The resulting dilution of our interests was
considerably less than our share of the new monies raised, and our results
reflect aggregate gains at the attributable profit level of some US$1 billion,
or US$0.09 per share, which should be regarded as exceptional.

We reinforced HSBC's position as the leading international bank in mainland
China. Our domestic operations in mainland China, following local incorporation,
grew strongly, with deposit and asset growth of over 50 per cent and 26 per cent
respectively, compared with the same period last year. Pre-tax profits grew by
69 per cent to US$473 million. We added seven outlets to what is already the
largest international branch network and recruited over 800 new staff to support
business growth.

In India, strong performance in CIBM drove the 39 per cent rise in profit before
tax. We significantly expanded our customer base and continued to invest heavily
in growing our business organically, particularly in consumer finance, while
maintaining a largely unchanged cost efficiency ratio at 55 per cent.

In Indonesia, where we are also investing in developing our consumer finance
business and opened 20 new outlets in the period, profit before tax grew 115 per
cent to US$58 million. In Vietnam, a market with great long-term potential, we
agreed to increase our stake in Techcombank and we are also growing our own
business rapidly there. We grew profit before tax by 117 per cent to US$21 
million in the first half, and increased headcount by a third.

Across Asia as a whole, our Commercial Banking business performed very well,
thanks in part to our success in growing the customer base. Commercial Banking
customers in Asia have increased by 6 per cent in the past year, with
particularly strong growth in mainland China and South Korea.

Our success in Asia is being driven in large part by our success in joining up
the Group to leverage skills transfer and international reach. In particular, in
our investment business, our Asian operations are capturing the leading share of
securities services revenues from custody and administration for international
funds groups. Reciprocally, we are producing developing market products, both
for our own asset management group and for third parties to distribute in the
developed world. Similar linkages exist in capital markets activities,
remittance services, cross-referral of commercial customers transacting overseas
and in consumer finance expansion throughout Asia.

Integration and development in Latin America on track

Profit before tax for Latin America grew by 16 per cent. From a handful of
offices a decade ago to some 4,000 in the region today, our operations now
account for 8 per cent of Group profit. We are one of the largest international
banks in the region, and we continue to develop our businesses in our major
markets in Mexico, Brazil, Argentina and now across Central America.

This was the first complete half-year contribution from Grupo Banistmo, the
leading bank in Central America, following its acquisition in 2006. Pre-tax
contribution of US$49 million was in line with our expectations and integration
is proceeding well.

Improved credit performance in Brazil, coupled with strong asset growth
contributed to pre-tax profit growth of 43 per cent. Growth in secured lending
and invoice financing has set the scene for sustained revenue growth, and
insurance sales in the existing customer base were also stronger.

Revenue growth in Mexico remained strong at just over 23 per cent as we improved
market share. We have built a highly successful business in the last five years,
which has already returned profits in excess of our total investment. In the
first half of 2007, customer acquisition grew at a higher rate than forecast,
and related costs affected profits through a rise in provisions which largely
offset the expansion in revenues. HSBC in Mexico continued to build market share
with credit cards, Tu Cuenta packaged accounts and Premier accounts all growing
by over 45 per cent compared with the previous year.

In Argentina, the successful integration of Banca Nazionale del Lavoro, a
well-timed acquisition in May 2006, contributed to a 14 per cent rise in pre-tax
profits to US$95 million. Once again, CIBM, working with local management,
helped HSBC in Argentina maintain leading positions in foreign exchange and
trade services for multinational companies operating there.

Benefiting from organic growth in the Middle East

Our Middle East businesses, excluding Saudi Arabia, grew strongly, with profit
before tax up by 31 per cent. Our operations in the United Arab Emirates and in
Egypt performed well as the region expanded its infrastructure development and
its outward investment, supported by sustained high oil prices.

Commercial Banking enjoyed higher revenues as a result of the region's high
growth and increased trade flows. High liquidity in the region and demand from
institutional customers led to strong sales of structured derivatives and other
products in CIBM.

The rollout of additional branches and customer service units, the expansion of
the direct sales force and sales of Premier products drove increased personal
customer numbers and higher revenues.

The contribution from Saudi Arabia was, however, lower as the stock market
declines which occurred in the second half of last year dampened market activity
in the first half of 2007.

Europe: investing in emerging markets and strong returns from UK Commercial Banking

Within emerging Europe, profits in Turkey grew by 34 per cent, even as we opened
25 new branches and installed 101 ATMs to develop our retail platform. Further
expansion is planned for the second half of the year. We obtained a licence to
begin retail business in Russia, where we aim to open over 35 branches in the
next three years.

We intend to expand our operations in Poland, the Czech Republic and Slovakia
for personal customers, and we are looking at other markets in Central and
Eastern Europe. We will also be opening more branches in Armenia, expanding in
Kazakhstan, and we have applied for a licence to begin operations in Georgia.

In continental Europe, our French operations were strongly ahead of the
comparable prior period, with profits growing by US$219 million, driven by CIBM
revenue growth.









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