HSBC Subsidiary Final Results

HSBC Holdings PLC
12 February 2002


                                HSBC BANK CANADA

                           2001 RESULTS - HIGHLIGHTS

* Net income attributable to common shares increased 21.9 per cent to C$206
million for the year ended 31 December 2001 compared to C$169 million in 2000.

* Income before taxes and non-controlling interest in income of subsidiaries was
C$377 million for the year ended 31 December 2001, an increase of 8.6 per cent
over 2000.

* The cost:income ratio (excluding amortisation of goodwill and intangible
assets) improved to 59.3 per cent from 65.2 per cent in 2000.

* Total assets of C$33.3 billion at 31 December 2001 (C$29.4 billion at 31
December 2000).

* Total capital ratio of 11.3 per cent and tier 1 capital ratio of 8.6 per cent
at 31 December 2001 (11.5 per cent and 8.6 per cent respectively at 31 December
2000).

* Funds under management were C$10.6 billion at 31 December 2001 compared to
C$10.2 billion at 31 December 2000.



HSBC Bank Canada reports 21.9 per cent increase in net income attributable to
common shares

HSBC Bank Canada recorded net income attributable to common shares for the year
ended 31 December 2001 of C$206 million, 21.9 per cent higher than C$169 million
for 2000. Income before taxes and non-controlling interest in income of
subsidiaries was C$377 million for the year ended 31 December 2001, an increase
of 8.6 per cent, compared to C$347 million for 2000. Net income attributable to
common shares was C$49 million for the three months ended 31 December 2001, an
increase of 28.9 per cent over the same period last year.

For the year ended 31 December 2001, the cost:income ratio, excluding
amortisation of goodwill and intangible assets, was 59.3 per cent compared to
65.2 per cent for 2000. For the quarter ended 31 December 2001, the cost:income
ratio was 63.3 per cent compared to 61.0 per cent for the comparable period in
2000.

Return on equity was 14.9 per cent for the year ended 31 December 2001, compared
to 15.3 per cent for the same period in 2000 due primarily to a higher level of
retained capital. Return on equity was 13.3 per cent for the three months ended
31 December 2001, compared to 12.1 per cent for the same period in 2000.

Martin Glynn, president and chief executive officer of HSBC Bank Canada said:
'We are pleased with the results for 2001, as the underlying business of the
bank performed strongly. There was improved profitability from all of our
business lines despite the challenging economic environment. We are also proud
of the increasing recognition in independent market surveys of the high quality
of our customer service.

'Higher net interest income was achieved from a combination of growth in the
loan and customer deposit portfolios and higher spreads due to improved pricing
and lower funding costs. Equity markets performed poorly, resulting in lower
capital market and trading revenues. However, this was more than offset by cost
containment measures and reduced performance-related expenses as a result of the
poor markets.

'Although the credit quality of our loan portfolio remains sound, we felt it
prudent to increase provisions compared to the third quarter of 2001 to cover a
small number of deteriorating commercial facilities and to maintain general
allowances at an appropriate level.

'In 2002 we will build upon the achievements of 2001, in an environment of
continuing risk and uncertainty. We will aim to do this by providing the highest
levels of customer service in Canada and using HSBC's international presence and
expertise.'

Financial Commentary


Net interest income


Net interest income for the fourth quarter of 2001 was C$197 million, an
increase of C$18 million, or 10.1 per cent, over the fourth quarter of 2000 and
in line with the third quarter of 2001. For the year ended 31 December 2001 net
interest income was C$754 million, an increase of 13.2 per cent over 2000. These
increases were due to a combination of continuing growth in the loan and core
customer deposit portfolios, primarily commercial loans and residential
mortgages, together with higher spreads due to improved pricing and market
conditions.

Net interest margin, as a percentage of average interest earning assets, for the
fourth quarter of 2001 was 2.66 per cent, 7 basis points lower than the same
period in 2000 and for the year was 2.70 per cent, 2 basis points higher than in
2000. During the fourth quarter, the larger than anticipated prime and base rate
reductions resulted in a squeeze in margins as earning assets repriced ahead of
the fall in funding costs.

Other income

Other income was C$111 million in the fourth quarter of 2001 compared to C$113
million in the fourth quarter of 2000 and C$102 million in the third quarter of
2001. For the year ended 31 December 2001, other income was C$419 million
compared to C$462 million in 2000. The weakness in the global equity markets,
experienced throughout 2001 resulted in lower capital market fees and trading
revenue. Capital market fees for the fourth quarter and year ended 31 December
2001 were C$29 million and C$98 million, respectively. This compared with C$36
million and C$162 million for the similar periods in 2000, which included C$4
million and C$30 million, respectively, of capital market fees from HSBC
InvestDirect (Canada) Inc. ('InvestDirect'). InvestDirect was transferred to the
Merrill Lynch HSBC joint venture ('Merrill Lynch HSBC') in the fourth quarter of
2000. However, the increase for the fourth quarter of 2001 compared to the third
quarter of 2001 reflected a slight recovery in equity markets and a higher level
of corporate finance activities.

Excluding capital market fees and trading revenue, other income from the other
lines of business, primarily personal financial services and commercial
financial services, increased by 12.4 per cent compared to 2000. Revenues from
deposit and payment services increased by 15.2 per cent mainly due to increased
use of our international payments services and an increased customer base.
Revenue from credit services, principally income from bankers' acceptances,
letters of credit and guarantees increased by 29.4 per cent. Despite the drop in
global equity markets, mutual fund management fees increased by 6.9 per cent
mainly due to increases in sales of HSBC Mutual Funds.

Non-interest expenses


Non-interest expenses were C$197 million in the quarter ended 31 December 2001
compared to C$180 million in the fourth quarter of 2000 and C$171 million in the
third quarter of 2001. For the year ended 31 December 2001, non-interest
expenses were C$704 million compared to C$742 million for 2000. Salaries and
employee benefits and other expenses were lower in 2001 due primarily to lower
performance-based compensation and volume-driven transaction expenses resulting
from the lower capital market fees in 2001. Non-interest expenses in the fourth
quarter of 2001 included C$9 million for costs associated with headcount
reductions. The increase in other expenses was mainly due to a number of one-off
operating expenses, including increased charges for commodity and capital taxes.
The year ended 31 December 2000 included C$15 million of non-interest expenses
from InvestDirect.

Provision for income taxes

The provision for income taxes was C$26 million for the fourth quarter of 2001
compared to C$61 million for the same quarter in 2000 and C$42 million in the
third quarter of 2001. For the year, the provision for income taxes was C$147
million in 2001 compared to C$155 million in 2000. The lower tax rate in the
fourth quarter of 2001 was partly due to a foreign tax credit of C$4 million,
whereas in the third quarter there were additional charges totalling C$5 million
to reflect the reduced value of future income tax assets following the fall in
certain provincial corporate income tax rates. In the fourth quarter of 2000,
there was a charge of C$12 million to reflect the reduced value of future income
tax assets following the announcement of federal corporate income tax rates.

Credit quality and provision for credit losses

During 2001, the bank's overall credit quality remained sound. The provision for
credit losses was C$30 million in the fourth quarter of 2001 compared to C$7
million in the same quarter of 2000 and C$24 million for the third quarter of
2001. For the year, the provision for credit losses was C$92 million compared to
C$39 million for 2000. The higher level of provisions for the year resulted from
the deterioration in a small number of commercial facilities and the maintenance
of a level of general provisions consistent with the underlying risk portfolio
of the loan book and stage of the credit cycle. The allowance for credit losses
was in excess of impaired loans by C$33 million at 31 December 2001.

Balance sheet


Despite the challenging economic environment, the bank achieved broadly based
growth during 2001. Total assets at 31 December 2001 were C$33.3 billion, up
C$3.8 billion (12.9 per cent) from 31 December 2000. Loans and acceptances
increased by C$2.6 billion due primarily to the continued growth of the
commercial loan portfolio, including acceptances, residential mortgages and
personal loans during 2001.

Total deposits increased C$3.2 billion (13.6 per cent) during 2001. Personal
deposits grew C$1.3 billion (10.5 per cent) to C$13.4 billion compared to C$12.1
billion at 31 December 2000. Commercial deposits increased by C$0.9 billion (8.4
per cent) to C$11.6 billion over the same period.

Funds under management

Funds under management were C$10.6 billion at 31 December 2001 compared to
C$10.2 billion at 31 December 2000 and C$9.5 billion at 30 September 2001. The
increase in funds under management reflected strong growth in mutual funds which
more than offset the decline in market values due to the weak global equity
markets over the year.

Capital

The bank's tier 1 capital ratio was 8.6 per cent and the total capital ratio was
11.3 per cent at 31 December 2001. This compares with 8.6 per cent and 11.5 per
cent, respectively, at 31 December 2000 and 8.3 per cent and 10.9 per cent,
respectively, at 30 September 2001.

Dividends

At its meeting on 8 February 2002, the Board of Directors declared a regular
dividend of 39.0625 cents per share (totalling C$2 million) on the Class 1
Preferred Shares - Series A. The dividend will be payable in cash on 1 April
2002, the first business day after 31 March 2002 for shareholders of record on
15 March 2002.

About HSBC Bank Canada

HSBC Bank Canada (TSE:HSB.PR.A), a subsidiary of HSBC Holdings plc, has more
than 160 offices across Canada. With over 6,500 offices in 78 countries and
territories and assets of US$692 billion at 30 June 2001, 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
www.hsbc.ca.

Copies of HSBC Bank Canada's 2001 Annual Report will be sent to shareholders
during April 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.


Highlights
                                                     Quarter ended                                Year ended
Figures in C$ millions                       31Dec01        30Sep01          31Dec00          31Dec01            31Dec00
(except per share amounts)

Earnings
Net interest income                              197            196              179              754                666
Income before taxes and non-
 controlling interest in subsidiaries             81            103              105              377                347
Net income                                        51             57               40              214                184
Net income attributable to
 common shares                                    49             55               38              206                169
Basic earnings per share                        0.11           0.12             0.09             0.45               0.52

Financial ratios (%)
Return on average common equity                 13.3           15.5             12.1             14.9               15.3
Return on average assets                        0.58           0.68             0.50             0.65               0.60
Net interest margin                             2.66           2.76             2.73             2.70               2.68
Cost:income ratio*                              63.3           56.7             61.0             59.3               65.2
Provision for credit losses:
average
 loans and acceptances                          0.48           0.40             0.12             0.39               0.18
Other income:total income ratio                 36.0           34.2             38.7             35.7               41.0

*Excluding amortisation of goodwill and intangible assets

Figures in C$ millions                                                                     At 31Dec01         At 31Dec00

Financial position
Total assets                                                                                   33,260             29,438
Total loans                                                                                    21,870             19,753
Total deposits                                                                                 26,707             23,511
Shareholders' equity                                                                            1,612              1,406

Total assets under administration
Funds under management                                                                         10,559             10,198
Custodial assets under administration                                                           2,110              2,500

Capital ratios (%)
Total capital                                                                                    11.3               11.5
Tier 1                                                                                            8.6                8.6


Consolidated Statement of Income (Unaudited)
                                                   Quarter ended                               Year ended
Figures in C$ millions                   31Dec01        30Sep01        31Dec00            31Dec01            31Dec00
(except per share amounts)

Interest and dividend income
Loans                                        329            368              397           1,448               1,444
Securities                                    30             36               47             153                 174
Deposits with regulated financial             22             27               40             123                 146
institutions
Total interest income                        381            431              484           1,724               1,764

Interest expense
Deposits                                    (176 )         (227 )           (297 )          (938 )            (1,068 )
Debentures                                    (8 )           (8 )             (8 )           (32 )               (30 )
Total interest expense                      (184 )         (235 )           (305 )          (970 )            (1,098 )

Net interest income                          197            196              179             754                 666

Provision for credit losses                  (30 )          (24 )             (7 )           (92 )               (39 )
Net interest income after
Provision for credit losses                  167            172              172             662                 627

Other income
Deposit and payment service                   17             17               16              67                  58
charges
Credit fees                                   14             14               13              53                  41
Capital market fees                           29             19               36              98                 162
Mutual fund and administration                11             14               11              51                  48
fees
Foreign exchange                              12             13               12              49                  47
Trade finance                                  6              7                5              24                  22
Trading revenue                                2              3                6              13                  26
Securitization income                          5              3                3              15                  11
Other                                         15             12               11              49                  47
                                             111            102              113             419                 462

Net interest and other income                278            274              285           1,081               1,089

Non-interest expenses
Salaries and employee benefits               (98 )          (90 )            (92 )          (359 )              (385 )
Premises and equipment                       (31 )          (25 )            (25 )          (115 )              (108 )
Other                                        (68 )          (56 )            (63 )          (230 )              (249 )
Total non-interest expenses                 (197 )         (171 )           (180 )          (704 )              (742 )

Income before taxes and
non-controlling
 interest in income of                        81            103              105             377                 347
subsidiaries
Provision for income taxes                   (26 )          (42 )            (61 )          (147 )              (155 )
Non-controlling interest in income
 of subsidiaries                              (4 )           (4 )             (4 )           (16 )                (8 )
Net income                                    51             57               40             214                 184
Preferred share dividends                     (2 )           (2 )             (2 )            (8 )               (15 )
Net income attributable to Common             49             55               38             206
shares                                                                                                           169


Average common shares outstanding        456,168        456,168          417,342         456,168             325,305
(000's)
Basic earnings per share                    0.11           0.12             0.09            0.45                0.52

Condensed Consolidated Balance Sheet (Unaudited)
                                                                                 At 31Dec01              At 31Dec00

Figures in C$ millions

Assets
Cash and deposits with Bank of Canada                                                   466                     375
Deposits with regulated financial institutions                                        3,261                   1,997
                                                                                      3,727                   2,372

Investment securities                                                                 2,474                   2,840
Trading securities                                                                    1,153                     955
                                                                                      3,627                   3,795

Assets purchased under
 Reverse repurchase agreements                                                          428                     436

Loans
  Businesses and government                                                          11,575                  11,330
  Residential mortgage                                                                8,377                   6,809
  Consumer                                                                            2,233                   1,899
  Allowance for credit losses                                                          (315 )                  (285 )
                                                                                     21,870                  19,753

Customers' liability under acceptances                                                2,571                   2,134
Land, buildings and equipment                                                           124                     118
Other assets                                                                            913                     830
                                                                                      3,608                   3,082
Total assets                                                                         33,260                  29,438

Liabilities and shareholders' equity
Deposits
  Regulated financial institutions                                                    1,747                     707
  Individuals                                                                        13,390                  12,116
  Businesses and governments                                                         11,570                  10,688
                                                                                     26,707                  23,511

Subordinated debentures                                                                 447                     422

Acceptances                                                                           2,571                   2,134
Assets sold under repurchase agreements                                                   7                      15
Other liabilities                                                                     1,686                   1,720
Non-controlling interest in subsidiaries                                                230                     230
                                                                                      4,494                   4,099
Shareholders' equity
  Preferred shares                                                                      125                     125
  Common shares                                                                         935                     935
  Contributed surplus                                                                   165                     165
  Retained earnings                                                                     387                     181
                                                                                      1,612                   1,406
Total liabilities and shareholders' equity                                           33,260                  29,438


Condensed Consolidated Statement of Cash Flows (Unaudited)

                                                Quarter ended                                    Year ended

Figures in C$ millions               31Dec01           30Sep01           31Dec00            31Dec01           31Dec00

Cash flows provided by (used in):
Operating activities                      76              (365 )           (311 )              34               (226 )
Financing activities                     247             1,787              331             3,180              2,222
Investing activities                     (30 )            (955 )            327            (2,414 )           (1,750 )
Increase (decrease) in cash and
 cash equivalents                        293               467              347               800                246
Cash and cash equivalents,
 Beginning of period                   2,845             2,378            1,991             2,338              2,092
Cash and cash equivalents,
 end of period                         3,138             2,845            2,338             3,138              2,338



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