HSBC subsid 3Q 2004 results

HSBC Holdings PLC
11 November 2004

                           HSBC TRINKAUS & BURKHARDT
                       SHOWS STRONG GROWTH IN Q3 RESULTS

   •Profit before tax was EUR87 million for the nine months ended 30
    September 2004, an increase of 42.9 per cent over the same period in 2003.
    Net profit after tax was EUR59.7 million, an increase of 79.8 per cent
    compared to the first nine months of 2003.

   •Operating profit in the first nine months was EUR70.7 million, an
    increase of 11.5 per cent for the same period in 2003.

   •Net fees and commission continued to be the most important element of the
    bank's profits, growing by 13.2 per cent in the nine months to 30 September
    2004 to EUR164.9 million. The bank benefited from continued growth in the
    number of remunerative client relationships in Private and Corporate
    Banking.

   •The bank is pleased to announce that it has signed a new securities
    processing agreement with Fimatex.

HSBC Trinkaus & Burkhardt, a 73.47 per cent indirectly-owned subsidiary of HSBC
Holdings plc, reported a clear increase in profits for the first nine months of
2004. Profit before tax rose by 42.9 per cent to EUR87 million and net profit
after tax was even stronger, rising 79.8 per cent to EUR59.7 million. This
result is partly due to the sale of the indirect shareholding in HSBC
Guyerzeller Bank in the second quarter of 2004 but also stems from the 11.5 per
cent increase in operating profits to EUR70.7 million. This year's objective - a
double-digit percentage increase in operating profits over the high level
reached in the previous year - was achieved in the first nine months.

The three factors underlying this positive development in operating profits
included, firstly, the clear increase in revenues from net fees and commission
income and income from trading activities. Secondly, administrative expenses
rose 9.2 per cent to EUR189.4 million. This apparent strong increase is actually
moderate as additional costs came from the completed transfer of DAB bank's
securities processing - an investment in future revenue streams. The migration
of DAB bank, which is one of Germany's leading direct banks, was successfully
completed in July.

Additionally the online broker Fimatex has just signed an outsourcing contract
with the bank and will transfer its securities processing to HSBC Trinkaus &
Burkhardt in 2005. This demonstrates the bank's robust competence in securities
and project management. Thirdly, lending provisions dropped by EUR2.7 million
compared to the previous year, without any easing of the conservative policy in
the assessment of credit risks.

The third quarter of 2004 was characterised by clearly lower transaction figures
in the securities business. Since the beginning of the year, the DAX has
fluctuated within a narrow band and far fewer businesses came to the stock
market than expected. In this environment, investors preferred to avoid
transactions. Against this background, the Managing Partners are pleased with
the results.

Net fees and commission in the first nine months rose by 13.2 per cent to
EUR164.9 million and thus continued to be the most important element of the
bank's profit. The bank benefited from continuing increases in the number of
remunerative client relationships in Private and Corporate Banking. Most
pleasing was the attained increase in the overall commission income, where a
sizeable mergers and acquisition transaction contributed to the favourable
outcome in the third quarter. Regarding institutional client business,
significant accomplishments were achieved in fixed income sales.

Institutional client business made the largest contribution of all segments to
the bank's operating profit for the first nine months in 2004, with EUR32
million as opposed to EUR24.1 million for the same period in 2003. In corporate
banking, operating profit increased from EUR27.9 million to EUR30.1 million. In
private banking, total operating profit increased from EUR21.8 million to
EUR22.1 million. Private banking's total operating profit includes a EUR6.3
million contribution from the sale of the indirect participation of HSBC
Guyerzeller Bank, whereas the corresponding 'income from investments' to private
banking's interest income has ceased. Income from proprietary trading in the
first nine months totalled EUR19.6 million compared to EUR21.2 million.

Trading profits improved by 19.9 per cent to EUR46.3 million in the first nine
months. While the trading contribution from equities and equity derivatives
nearly reached the previous year's high level, the revenues generated in both
interest and foreign exchange business more than doubled. Net interest income,
as a result of several factors, declined by 12 per cent to EUR50.5 million. Even
though the interest income from corporate client business remained relatively
stable, the interest income from financial investments dropped due to declining
volumes of high interest bonds. Also, the prior year's figures still included
earnings from the affiliated company, HSBC Guyerzeller Bank - this income is no
longer reported, with effect from 1 January 2004 due to the sale of this
investment.

Administrative expenses have risen primarily due to two elements. Firstly,
personnel expenses increased by 7.3 per cent to EUR121.4 million as a result of
increased personnel and higher bonuses linked to profit growth. Secondly, the
rise was also associated with higher IT costs. The transfer of DAB bank's
securities processing was accompanied by additional staffing and higher costs
for hardware and software.

For the last quarter in 2004, the Managing Partners expect to maintain the
growth of operating profits. Nevertheless, this will depend on the transaction
volumes of the financial markets. The Managing Partners are confident that, with
the bank's effective credit risk management system, the results will be
protected from any large provisions. The rise in administrative expenses should
not go beyond a single-digit percentage, whereby the cost components are
intensively controlled, without forgoing any potential revenues. Under these
assumptions the revenue objectives will be reached and the shareholders would
therefore participate in higher profits.

                                      ends




                      This information is provided by RNS
            The company news service from the London Stock Exchange