HSBC USA Inc Interim Results

HSBC Holdings PLC
6 August 2001

                                HSBC USA INC.
                      2001 interim results - highlights

* Net income in the first half of 2001 increased by 27 per cent to US$369
million from US$290 million in the first half of 2000.

* Cash earnings ^ in the first half increased 23 per cent to US$450 million
from US$367 million for the same period in 2000.

* The cost: income ratio (excluding goodwill amortisation and restructuring
costs) for the first half of 2001 was 52.1 per cent, compared to 57.1 per cent
in the first half of 2000.

* Tier 1 capital to risk-weighted assets was 8.5 per cent at 30 June 2001,
compared to 8.7 per cent at 30 June 2000.

* Cash earnings ^ as a percentage of average common equity for the first
half of 2001 were 13.3 per cent compared to 11.2 per cent during the first
half of 2000.

* Client assets under administration at 30 June 2001 were US$46.9 billion, of
which US$31.2 billion were funds under management and US$15.7 billion were
custody accounts.

^ Cash earnings are primarily net income after preferred dividends and after
adding back goodwill amortisation.

Note: figures for 2000 have been restated to exclude investments in entities
transferred to HSBC North America Inc. during 2001 and 2000.



Financial Commentary

HSBC USA Inc. recorded net income of US$369 million for the six months ended
30 June 2001, an increase of 27 per cent from US$290 million in the first half
of 2000. Cash earnings for the first half of 2001 were US$450 million, up from
US$367 million for the comparable period in 2000.

For the quarter ended 30 June 2001, net income totalled US$188 million, an
increase of 34 per cent from US$140 million for the quarter ended 30 June
2000. Cash earnings for the quarter totalled US$229 million compared to US$179
million for the 2000 second quarter.

Youssef Nasr, Chief Executive Officer of HSBC USA Inc., said: 'We are
gratified with the results that we have reported today, especially in light of
the challenging economic environment we have been faced with in the first half
of 2001. Our focus continues to be on cash earnings and for the first half we
reported a 23 per cent increase from the comparable period last year.'

Despite a slowing US economy and difficult market conditions in the first half
of 2001, HSBC USA Inc. exhibited broad growth. Total assets were US$85.4
billion compared to US$82.4 billion at 30 June 2000. Total deposits were
US$58.0 billion at 30 June 2001, up 5 per cent from US$55.1 billion at 30 June
2000 and compared to US$56.0 billion at 31 December 2000. Total loans at 30
June 2001 were US$42.0 billion, up 8 per cent from US$38.8 billion at 30 June
2000 and compared to US$40.4 billion at 31 December 2000. Residential mortgage
lending saw a significant increase in volume as a result of the high level of
refinancing activity as interest rates steadily moved lower during the first
six months of 2001. HSBC Mortgage Corporation, a subsidiary of HSBC Bank USA,
with more than 300,000 customers, originated US$6.6 billion in mortgages
through the first six months of 2001, an increase of 128 per cent from US$2.9
billion in mortgages funded during the first half of 2000. Approximately 40
per cent of this volume will be held in the bank's loan portfolio, with the
remaining volume sold while retaining the servicing.

HSBC Bank USA continues to emphasize the growth of its wealth management
business. Total funds under management at 30 June 2001 were US$31.2 billion,
an increase of US$2.8 billion, or 10 per cent, since 30 June 2000. Including
custody balances, assets under administration totalled US$46.9 billion at 30
June 2001.

Total on and off-balance sheet customer holdings in International Private
Banking (New York, Florida and California) increased by more than 16 per cent
from 30 June 2000. Fee income from domestic wealth management was US$102.7
million during the first half of 2001, an increase of 13 per cent compared to
the same period in 2000. Life insurance revenues for the first six months of
2001 were US$13.4 million, an increase of 72 per cent from US$7.8 million for
the first half of 2000.

As part of its strategy of providing customers with multiple choices for
product and service delivery, HSBC Bank USA offers a comprehensive Internet
Banking service. At 30 June 2001, more than 142,000 customers had registered
for the service, up from approximately 80,000 at year-end 2000. The HSBC Bank
USA web site, us.hsbc.com, where customers can apply for accounts, conduct
financial planning and link to online services, receives over 20,000 visits
daily. The recent successful launch of an account aggregation service expands
HSBC Bank USA's online offerings and gives customers increased convenience and
flexibility in managing online accounts.

For the six months ended 30 June 2001, net interest income showed growth of
US$60 million, or 6 per cent, to US$1.1 billion. In addition to the benefit of
loan and core deposit growth, recent short-term rate cuts have led to wider
interest margins in certain commercial businesses, the residential mortgage
business and treasury investment operations.

For the first half of 2001, other operating income was US$560 million, an
increase of US$152 million, or 37 per cent from US$408 million for the 2000
first half. Securities gains of US$126 million were realized from securities
sales to adjust to interest rate changes and to reconfigure exposure to
residential mortgages. A one-time gain of US$19 million was recorded in the
first quarter from the sale of shares of Canary Wharf, a retail/office
development in London, England. Mortgage banking, commercial lending and
bankcard non-interest income were strong during the first half of 2001.
Trading revenues picked up during the period.

Operating expenses for the first six months of 2001 increased to US$975
million from US$945 million in the comparable period of last year due
primarily to business expansion and infrastructure investment initiatives. All
restructuring relating to the acquisition of Republic New York Corporation
from a customer perspective is complete. Certain back office systems
conversions are in the final stages.

Over 90 per cent of originally targeted domestic cost savings related to the
acquisition have been realized to date, and the remaining cost saves have been
identified. New business initiatives are focused on developing e-commerce
delivery capability and on growing the private banking, wealth management, and
treasury businesses. Aside from these initiatives, and after adjusting for
inflation and business transfers, expenses were down approximately 7 per cent
year to year.

Mr. Nasr added: 'In treasury we have bolstered operations, hiring several
professionals in foreign exchange and derivatives as well as other specialists
that will provide further support to our corporate and commercial client
base.'

During the first half of 2001, credit quality remained relatively stable,
notwithstanding a more volatile business and credit environment. Provisions
for the first half of 2001 were US$96 million which exceeded charge-offs of
US$63 million for the same period. The ratio of allowance available for credit
losses to non-accruing loans strengthened from 124.1 per cent at 31 December
2000 to 137.9 per cent at 30 June 2001.

Common equity was US$6.8 billion at 30 June 2001 compared to US$6.5 billion at
30 June 2000. The ratio of tier 1 capital to risk-weighted assets was 8.5 per
cent compared to 8.7 per cent at 30 June 2000. The ratio of total capital to
risk-weighted assets was 13.4 per cent compared to 14.6 per cent at 30 June
2000. The ratio of cash earnings to common equity was 13.3 per cent compared
to 11.2 per cent at 30 June 2000.

Summary

                     Quarter ended                      Six months ended
Figures in US$ 30Jun01           30Jun00 ^^        30Jun01           30Jun00 ^^
millions                                                                   

Net income         188               140               369               290

Cash earnings ^    229               179               450               367


Performance
ratios (%)
Cash earnings
as a
percentage of
 average          13.5              11.0              13.3              11.2
common equity
Cost:income
ratio
(excluding
goodwill
amortisation
 and              51.5              56.7              52.1              57.1
restructuring
costs)
Staff numbers                                       14,536            14,216
(full-time
equivalents)

Average
balances
Loans           41,191            38,193            40,799            38,416
Earning assets  77,322            75,341            77,386            74,216
Total assets    85,677            83,783            85,363            82,746
Deposits        58,227            54,976            57,971            54,475
Common equity    6,807             6,506             6,837             6,571

Net yields on
total assets
 (tax              2.7               2.6               2.7               2.6
equivalent
basis) (%)

Assets under
administration
Funds under                                         31,182            28,336
management
Custody                                             15,723            16,114
accounts
Total assets                                        46,905            44,450
under
administration

Credit
information
Non-accruing                                           390               352
loans
Net charge                                              63                75
offs
Allowance
available for
credit losses
- Balance at                                           538               615
end of period
- As a                                               137.9 %           174.7 %
percentage of
non-accruing
loans
- As a                                                1.28 %            1.59 %
percentage of
loans
outstanding

Capital (at
end of period)
Common equity                                        6,857             6,546
As a                                                   8.0 %             7.9 %
percentage of
total assets

Capital ratios
(%)
Leverage ratio                                         5.9               5.6
Tier 1 capital                                         8.5               8.7
to
risk-weighted
assets
Total capital                                         13.4              14.6
to
risk-weighted
assets

^ Cash earnings are net income after preferred dividends, after adding back
goodwill amortisation

and expense associated with HSBC Group share option plans.

^^ Restated to exclude investments in entities transferred to HSBC North
America Inc. during

2001 and 2000.

Consolidated Statement of Income
                                               Quarter           Quarter
                                                 ended             ended
Figures in US$ thousands                       30Jun01           30Jun00 ^^
                                                                         

Interest income
Loans                                          752,231           750,239
Securities                                     340,222           401,591
Trading assets                                  62,207            23,796
Other short-term investments                    99,610           165,131
Total interest income                        1,254,270         1,340,757

Interest expense
Deposits                                       509,388           577,779
Short-term borrowings                           88,485           123,448
Long-term debt                                  84,607           112,085
Total interest expense                         682,480           813,312

Net interest income                            571,790           527,445

Provision for credit losses                     48,000            28,007
Net interest income, after provision for       523,790           499,438
credit losses

Other operating income
Trust income                                    22,004            22,400
Service charges                                 47,536            43,173
Mortgage banking revenue                         7,417             8,577
Other fees and commissions                      82,511            74,240
Trading revenues                                51,846            33,122
Security gains                                  56,601             3,763
Other income                                       269            12,251
Total other operating income                   268,184           197,526

Total income from operations                   791,974           696,964

Other operating expenses
Salaries and employee benefits                 241,429           248,625
Occupancy expense, net                          38,136            43,870
Other expenses                                 159,796           137,353
Operating expenses before goodwill             439,361           429,848
amortisation
Goodwill amortisation                           44,168            43,731
Total other operating expenses                 483,529           473,579

Income before taxes and cumulative effect
of accounting change                           308,445           223,385
Applicable income tax expense                  120,400            83,152
Income before cumulative effect of
accounting change                              188,045           140,233
Cumulative effect of accounting change-
 implementation of FAS 133                           -                 -

Net income                                     188,045           140,233

^^ Restated to exclude investments in entities transferred to HSBC North
America Inc.  during2001 and 2000.

Consolidated Statement of Income
                                          Six months          Six months
                                               ended               ended
Figures in US$ thousands                     30Jun01             30Jun00 ^^
                                                                         

Interest income
Loans                                      1,537,801           1,488,913
Securities                                   715,884             786,133
Trading assets                               123,126              52,138
Other short-term investments                 215,033             271,606
Total interest income                      2,591,844           2,598,790

Interest expense
Deposits                                   1,092,228           1,106,890
Short-term borrowings                        208,873             220,203
Long-term debt                               175,175             216,268
Total interest expense                     1,476,276           1,543,361

Net interest income                        1,115,568           1,055,429

Provision for credit losses                   95,550              56,000
Net interest income, after provision
 for credit losses                         1,020,018             999,429

Other operating income
Trust income                                  44,843              42,544
Service charges                               91,440              86,681
Mortgage banking revenue                      19,614              15,164
Other fees and commissions                   159,010             153,674
Trading revenues                             102,243              84,529
Security gains                               125,780               1,362
Other income                                  17,702              24,523
Total other operating income                 560,632             408,477

Total income from operations               1,580,650           1,407,906

Other operating expenses
Salaries and employee benefits               484,589             497,179
Occupancy expense, net                        76,200              85,593
Other expenses                               325,120             275,003
Operating expenses before goodwill           885,909             857,775
amortisation
Goodwill amortisation                         89,259              87,461
Total other operating expenses               975,168             945,236

Income before taxes and cumulative
effect of
 accounting change                           605,482             462,670
Applicable income tax expense                236,200             172,599
Income before cumulative effect of
accounting
 change                                      369,282             290,071
Cumulative effect of accounting change
-implementation of FAS 133                     (451)                   -

Net income                                   368,831             290,071

^^ Restated to exclude investments in entities transferred to HSBC North
America Inc. during 2001 and 2000.

Consolidated Balance Sheet


Figures in US$         At 30Jun01        At 30Dec00 ^^         At30Jun00
thousands                                           

Assets
Cash and due from       1,799,801         1,860,713             2,072,589
banks
Interest bearing        4,464,175         5,129,490             5,303,088
deposits with banks
Federal funds sold
and securities
purchased
 under resale           3,338,625         1,895,492             2,438,516
agreements
Trading assets          8,829,729         5,770,972             4,356,965
Securities available   13,943,034        17,336,832            18,007,717
for sale
Securities held to      4,867,068         4,260,492             4,506,385
maturity
Loans                  41,988,236        40,417,847            38,755,764
Less - allowance for      537,877           524,984               614,559
credit losses
Loans, net             41,450,359        39,892,863            38,141,205

Premises and              792,537           777,610               764,038
equipment
Accrued interest          481,808           785,286               759,075
receivable
Equity investments         265,484           55,596                51,073
Goodwill and other       3,045,296        3,229,479             3,217,577
acquisition
intangibles
Other assets             2,145,374        2,040,325             2,760,514

Total assets            85,423,290       83,035,150            82,378,742

Liabilities
Deposits in domestic
offices
- Non-interest           5,188,876        5,114,668             6,748,808
bearing
- Interest bearing      32,584,323       30,631,511            29,054,325
Deposits in foreign
offices
- Non-interest             361,092          282,737               247,248
bearing
- Interest bearing      19,903,807       20,013,588            19,004,411
Total deposits          58,038,098       56,042,504            55,054,792

Trading account          3,568,295        2,766,825             2,403,242
liabilities
Short-term borrowings    8,574,749        8,562,363             9,289,758
Interest, taxes and      3,067,265        3,232,918             2,688,780
other liabilities
Subordinated
long-term debt and
perpetual
capital notes            2,945,832        3,027,014             3,424,539
Guaranteed                 723,218          711,737               710,998
mandatorily
redeemable securities
Other long-term debt     1,148,915        1,357,904             1,761,072
Total liabilities       78,066,372       75,701,265            75,333,181

Shareholders' equity
Preferred stock            500,000          500,000               500,000
Common shareholders'
equity
- Common stock                   4                4                     4
- Capital surplus        6,025,013        6,104,264             6,099,264
- Retained earnings        793,642          612,798               497,781
- Accumulated other         38,259          116,819              (51,488)
comprehensive income
(loss)
Total common             6,856,918        6,833,885             6,545,561
shareholders' equity
Total shareholders'      7,356,918        7,333,885             7,045,561
equity
Total liabilities and   85,423,290       83,035,150            82,378,742
shareholders' equity

^^ Restated to exclude investments in entities transferred to HSBC North
America Inc. during  2001 and 2000.