Interim Results - Part 3

HSBC HOLDINGS PLC
2 August 1999


PART THREE


HSBC Holdings plc                    HSBC Rest of Asia-Pacific Operations
                                                                         
_________________________________________________________________________

HSBC Rest of Asia-Pacific operations

Our operations in the Rest of Asia-Pacific returned to profitability
contributing US$180 million, or 4.4 per cent of Group profits before
tax. The improvement in profitability compared to 1998 was principally
as a result of lower bad debt charges. With the exception of our
operations in Malaysia, mainland China and Macau, all major operations
within the Rest of Asia-Pacific were profitable in the first half of
1999.

Net interest income was lower than in the first half of 1998 by US$36
million as the drag from non-performing loans impacted performance as
did lower interest rates. The exceptional conditions experienced during
the first half of 1998 in the foreign exchange markets were not
repeated, leading to dealing profits being lower by US$104 million. The
contribution from fees and commissions grew modestly with good growth
seen in the Middle East, Japan, Korea and Taiwan. Improved economic
conditions led to lower and more stable interest rates across Asia and
progress was evidenced in corporate restructuring in many countries.
Accordingly, operating income improved against the second half of 1998
and provisions for bad and doubtful debts were some 30 per cent lower
when compared with both the first and second halves of 1998.

Of particular note, provisioning requirements in respect of exposures to
customers in Indonesia and Thailand fell dramatically. The charge for
the first half of 1999 was approximately 10 per cent of the charge in
the comparable period in 1998. Exposures to customers in Malaysia
experiencing repayment difficulties contributed approximately 50 per
cent of the net charge for bad and doubtful debts in the Rest of Asia-
Pacific, an amount more than double the corresponding charge in the
first half of 1998 and slightly ahead of the second half's charge. The
HSBC Group's operations in mainland China and the Middle East also saw
bad debt charges increase. In addition to the significant reductions in
Thailand and Indonesia noted above, lower bad debt charges were recorded
in Singapore, Japan, the Philippines, India and New Zealand. Credit
quality in Korea remained stable with a very low level of non-performing
debt.

Costs remained tightly controlled. An exceptional charge equivalent to
US$16 million was included in staff costs in respect of a Voluntary
Separation Scheme offered to staff in Malaysia as part of the
restructuring of our operations there. As a result of this scheme, some
1,000 staff will leave the operation by the end of this year enabling
greater centralisation and automation of processing to take place. Staff
increases were recorded in India and Taiwan as a result of new branch
openings.

Non-performing loans as a percentage of total loans (net of suspended
interest) increased from 6.9 per cent at 30 June 1998 to 10.7 per cent
at 30 June 1999 but the rate of increase of non-performing loans slowed
noticeably against the second half of 1998.

                                     Half-year   Half-year    Half-year
                                            to          to           to
Figures in US$m                        30JUN99     30JUN98      31DEC98 
                                                                     
Net interest income                        619         655          600 
                                                                        
Dividend income                              1           1            1 
Net fees and commissions                   304         294          272 
Dealing profits                            160         264          149 
Other income                                17          18           15 
Other operating income                     482         577          437 
                                                                        
Operating income                         1,101       1,232        1,037 
                                                                        
Staff costs                               (318)       (284)       (278)
Premises and equipment                     (61)        (56)        (60)
Other                                     (135)       (144)       (155)
Depreciation                               (34)        (39)        (36)
Operating expenses                        (548)       (523)       (529)
                                                                         
Operating profit before provisions         553         709         508 

Provisions for bad and doubtful                                         
  debts                                   (423)       (605)       (614)
Provisions for contingent                                               
  liabilities and commitments               (7)        (73)         36 

Amounts written off fixed asset                                         
  investments                               (2)         (1)        (10)
                                                                        
Operating profit                           121          30         (80)
                                                                        
Income from associated                                                  
  undertakings                              44          44          47 
                                                                        
Gains/(losses) on disposal of                                           
  investments and tangible fixed
  assets                                    15          (1)         (1)
                                                                        
Profit/(loss) before tax                   180          73         (34)
                                                                        
Share of Group pre-tax profits             4.4%        2.0%       (1.2)%
                                                                        
Period end staff numbers (FTE basis)    20,751      20,492      21,116 
                                                                        
Cost:income ratio                         49.8%       42.5%       51.0%
                                                                       
Customer loans and advances and provisions                            
                                            AT         AT            AT 
Figures in US$m                        30JUN99    30JUN98       31DEC98 
                                                                       
Loans and advances to customers                                         
  (gross)                               31,654      31,995       32,380 
                                                                        
Residential mortgages                    3,051       2,347        2,746 
Other personal                           3,273       3,318        3,322 
Total personal                           6,324       5,665        6,068      
Commercial, industrial and                                                   
  international trade                   12,014      13,176       13,189      
Commercial real estate                   3,402       3,633        3,601      
Other property related                   2,109       1,967        2,126      
Government                                 689         253          567      
Non-bank financial institutions          1,203       1,354        1,527      
Settlement accounts                        475         373          231      
Other commercial*                        5,438       5,574        5,071 
                                                                        
Specific provisions outstanding against                                 
  loans and advances                     2,029       1,397        1,701 
                                                                        
Non-performing loans**                   3,354       2,174        3,032 
                                                                        
Specific provisions outstanding as a                                    
  percentage of non-performing loans**    60.5%       64.3%        56.1%
                                                                        
Non-performing loans as a percentage                                    
  of gross loans and advances to                                          
  customers**                             10.7%        6.9%         9.4%
                                                                        
Half-year bad and doubtful debt                                         
  charge                                                                  
                                                                        
Loans and advances to customers                                         
- specific charge:                                                      
  new provisions                          569          648          713 
  releases and recoveries                (130)         (46)         (93)
                                          439          602          620 
- net general (releases)/charge           (14)           3          (11)
Customer bad and doubtful debt charge     425          605          609 
                                                                        
Loans and advances to banks:                                             
- net specific (releases)/charge           (2)          -             5 
                                                                         
Total bad and doubtful debt charge        423          605          614 
                                                                         
Customer bad debt charge as a                                            
  percentage of closing gross
  loans and advances (annualised)         2.7%         3.8%         3.8%

*  Includes advances in respect of Agriculture, Transport, Energy and
   Utilities.
** Net of suspended interest

Customer loans and advances by principal area within Rest of Asia-Pacific
                                                                     
                                                        Commercial     
                                                           inter'l     
Figures in US$m       Residential   Other    Property    trade and     
                        mortgages  personal   related        other      Total
As at 30 June 1999                                                           
                                                                             
Loans and advances to                                                        
  customers (gross)
                                                          
Singapore                   447        587       1,549      3,414       5,997
                                                                             
Australia and New                                                            
  Zealand                 1,305         88       1,432      2,349       5,174
                                                                             
Malaysia                    548        350         706      2,989       4,593
                                                                             
Middle East                  22      1,593         418      2,373       4,406
                                                                             
Indonesia                     3         15          21        856         895
                                                                             
South Korea                  29         16          13        678         736
                                                                             
Thailand                     48         54          98        965       1,165
                                                                             
Japan                        35          6         188      1,897       2,126
                                                                             
Mainland China               38          -         644      1,325       2,007
                                                                             
Other                       576        564         442      2,973       4,555
                                                                             
Total of  Rest of Asia-                                                      
  Pacific                 3,051      3,273       5,511     19,819      31,654
                                                                             
Customer loans and advances by principal area within Rest of
Asia-Pacific (continued)                                             
                                                        Commercial     
                                                          intern'l
Figures in US$m       Residential   Other    Property    trade and
                        mortgages  personal   related        other    Total
As at 31 December 1998                                                      
                                                                            
Loans and advances to                                                       
  customers (gross)                                                         
                                                                            
Singapore                   464        673       1,754      3,350     6,241 
                                                                            
Australia and New                                                           
  Zealand                 1,105         66       1,432      2,277     4,880 
                                                                            
Malaysia                    525        353         728      3,148     4,754 
                                                                            
Middle East                  26      1,590         276      2,877     4,769 
                                                                            
Indonesia                     2         15          26        908       951 
                                                                            
South Korea                  19         25          13        488       545 
                                                                            
Thailand                     56         57         110      1,054     1,277 
                                                                            
Japan                        37          7         210      2,152     2,406 
                                                                            
Mainland China               41          -         711      1,395     2,147 
                                                                            
Other                       471        536         467      2,936     4,410 
                                                                            
Total of Rest of Asia-                                                      
  Pacific                 2,746      3,322       5,727     20,585    32,380 
                                                                            
                                                       Commercial
                                                         intern'l    
Figures in US$m       Residential   Other    Property   trade and
                        mortgages  personal   related       other     Total
As at 30 June 1998                                                          
                                                                            
Loans and advances to                                                       
  customers (gross)                                                           
                                                             
Singapore                   408        641       1,792      4,237     7,078 
                                                                            
Australia and New                                                           
  Zealand                 1,015         61       1,513      2,249     4,838 
                                                                            
Malaysia                    439        348         549      2,807     4,143 
                                                                            
Middle East                  24      1,660         249      2,375     4,308 
                                                                            
Indonesia                     1         11          28        812       852 
                                                                            
South Korea                   7         31          11        652       701 
                                                                            
Thailand                     54         56         108      1,068     1,286 
                                                                            
Japan                        31          6         158      1,869     2,064 
                                                                            
Mainland China               53          -         720      1,596     2,369 
                                                                            
Other                       315        504         472      3,065     4,356 

Total of Rest of Asia-                                                      
 Pacific                  2,347      3,318       5,600     20,730    31,995 
                                                                            
HSBC Holdings plc                          HSBC North American Operations
                                                                         
_________________________________________________________________________

HSBC North American Operations

Our operations in North America contributed US$530 million to the HSBC
Group's profit before tax in the first half of 1999, an increase of 2.9
per cent. This represented 13.0 per cent of the HSBC Group's pre-tax
profit as against 14.0 per cent in the first half of 1998.

USA
Our banking operations in the US generated profit before tax modestly
higher than in the first half of 1998 which included a gain of US$28
million on the sale of credit card portfolios. The first half of 1999
benefited from a gain of US$15 million from the sale of a student loan
business in California.

Net interest income in the first half of the year in the US was higher
than for the same period last year due to a combination of growth in
average interest-earning assets and an improved net interest margin. The
impact of lower funding costs and a favourable change in asset mix
contributed to the improvement in net interest margin. There was a
reduced contribution from net free funds mainly due to a fall in
interest rates.

Other operating income was stable against the same period last year with
a greater contribution within fees and commissions from wealth
management products, including insurance.

Overall, costs grew by 3 per cent and continued to reflect careful cost
control.

Our treasury and investment banking operations in the US produced a much
improved operating performance in the first half of 1999 largely
reflecting a refocusing and rationalisation of activities mainly
completed during 1998.

Canada

In Canada our banking operations reported an increase of 26 per cent in
profit before tax when compared to the six months ended 30 April 1998,
the comparable period included in HSBC's interim results for 1998.

Net interest income for the half year was only slightly better than for
the same period last year. Loan growth and higher levels of interest
recoveries on non-performing loans were offset by a fall in net interest
margin. The growth in the bank's loan portfolio, particularly in
commercial loans, was driven by a combination of factors. These included
new business gained, particularly in the latter part of 1998, through
previously-proposed consolidations in Canadian financial services and
through the acquisition of National Westminster Bank of Canada. The fall
in net interest margin was due to a narrowing in spread as a result of
continuing competitive pressures and a change in funding mix. This was
only partially offset by an increased contribution from higher levels of
net free funds, mainly as a result of the acquisition of Gordon Capital
Corporation and Moss, Lawson.

Other operating income was higher, against the same period last year,
due to growth in brokerage commissions following the acquisitions
referred to previously and through higher trading revenues. These offset
a fall in the level of corporate finance and mutual fund fees earned in
the half-year as a consequence of weaker equity and underwriting
markets. In addition, higher volumes in bankers' acceptances and
guarantees resulted in an increased level of credit fee income.

Acquisitions made during the year and increased investment in new
business and delivery channels were the principal contributors to higher
operating expenses. Part of the cost growth also reflected
centralisation of some of the bank's operating functions, which were
restructured to achieve increased efficiencies and to improve customer
service in the future.

There was no repeat step change in the level of general provision
charged in the first half of last year, which reflected the economic
decline in certain provinces, in particular British Columbia, and as a
result the charge for bad and doubtful debts in the half-year fell.

                                    Half-year      Half-year   Half-year*
Figures in US$m                            to             to          to 
                                      30JUN99        30JUN98     31DEC98
                                                                       
Net interest income                       817            787         831 
                                                                        
Dividend income                             6              7           7 
Net fees and commissions                  294            296         300 
Dealing profits                           109             40          36 
Other income                               81             80         105 
Other operating income                    490            423         448 
                                                                        
Operating income                        1,307          1,210       1,279 
                                                                        
Staff costs                              (409)          (374)       (407)
Premises and equipment                    (90)           (85)        (95)
Other                                    (192)          (184)       (213)
Depreciation                              (35)           (30)        (36)
Operating expenses                       (726)          (673)       (751)
                                                                        
Operating profit before provisions        581            537         528 
                                                                        
Provisions for bad and doubtful debts     (63)           (49)        (60)
                                                                         
Provisions for contingent liabilities                                    
  and commitments                           -             (1)         (9)
                                                                         
Operating profit                          518            487         459 
                                                                         
Income from associated undertakings         2              1           1 
                                                                         
Gains on disposal of investments and                                     
  tangible fixed assets                    10             27          12 
                                                                         
                                                                         
Profit before tax                         530            515         472 
                                                                         
Share of Group pre-tax profits           13.0%          14.0%       16.4%
                                                                         
Period end staff numbers (FTE basis)   14,907         14,350      14,500 
                                                                         
Cost:income ratio                        55.5%          55.6%       58.7%
                                                                         

*  Includes results from HSBC Bank Canada for the eight month
   period ended 31 December 1998.

Customer loans and advances and provisions                            
                                            AT          AT           AT 
Figures in US$m                        30JUN99     30JUN98      31DEC98 
Loans and advances to customers                                         
  (gross)                               43,864       44,734      42,531 
                                                                        
Residential mortgages                   13,227       13,210      13,059 
Other personal                           5,212        5,277       5,265 
Total personal                          18,439       18,487      18,324 
Commercial, industrial and                                              
  international trade                    6,285        6,087       6,444 
Commercial real estate                   4,898        4,709       4,615 
Other property related                   1,733        1,589       1,591 
Government                                 787          534         651 
Non-bank financial institutions          3,673        6,642       3,238 
Settlement accounts                      4,068        2,184       3,734 
Other commercial*                        3,981        4,502       3,934 
                                                                        
Specific provisions outstanding                                         
  against loans and advances               233          196         223 
                                                                        
Non-performing loans**                     557          569         590 
                                                                        
Specific provisions outstanding as a                                    
  percentage of non-performing loans**    41.8%        34.4%       37.8%
                                                                        
Non-performing loans as a percentage                                    
  of gross loans and advances to                                        
  customers**                              1.3%         1.3%        1.4%
                                                                        
Half-year bad and doubtful debt charge                                  
                                                                        
Loans and advances to customers                                          
- specific charge:                                                       
  new provisions                          115            77          179 
  releases and recoveries                 (52)          (64)         (47)
                                           63            13          132 
- net general charge/(releases)             -            36          (72)
Total bad and doubtful debt charge         63            49           60 
Customer bad debt charge as a                                            
  percentage of closing gross loans 
  and advances (annualised)               0.3%          0.2%         0.3%

*   Includes advances in respect of Agriculture, Transport, Energy and
    Utilities.
**  Net of suspended interest.

HSBC Holdings plc                         HSBC Latin American Operations
_________________________________________________________________________

HSBC Latin American Operations

HSBC's Latin American operations consist primarily of HSBC Argentina and
HSBC Bank Brasil S.A. - Banco Multiplo.

Despite the devaluation of the Brazilian Real, our Latin American
operations contributed US$248 million to the HSBC Group's profit before
tax in the first half of the year, an increase of 74.6 per cent. The
instabilities in the Brazilian financial markets at the beginning of
1999 resulted in exceptional profits from wide interest margins and
foreign exchange earnings in the first half of 1999, which are not
expected to recur. The proportion of the HSBC Group's pre-tax profit
contributed by its Latin American operations increased from 3.8 per cent
to 6.1 per cent.

Brazil

The high interest rate environment and volatility in the exchange rate
in the first half of 1999 led to exceptionally strong net interest
income and foreign exchange dealing profits. As a result, our Brazilian
operations reported profits 67 per cent higher than in the first half of
1998 in US dollar terms. Although these exceptional factors most
impacted current financial performance, of greater importance for the
longer term was the progress made in changing the business mix to
conform with the Group's 'Managing for Value' strategy.

In the first half of 1999 our banking operations achieved a substantial
increase in cross-sales of retail banking and insurance products. Much
of this improvement in cross-sales was achieved through fund management
operations where funds under management grew from BRL4.5 billion to
BRL7.0 billion during the period. Our insurance operations also
increased their penetration of products through the bank distribution
channels with 30 per cent of insurance revenues now earned through these
channels against 19 per cent during the same period last year.

The charge for bad and doubtful debts remained low and well covered
within the margins achieved on lending products. Overall credit demand
remained subdued and a cautious approach has been taken to lending to
the middle market sector in view of high interest rates and volatile
exchange rates.

The strong operating earnings together with slow growth in risk-weighted
assets generated a very positive capital retention enabling our
Brazilian operations to pay dividends of US$111 million during the
period.

Argentina

Our Argentinian operations reported profits before tax US$33 million
higher than the break-even position reported in the same period last
year. This was due largely to improved operational efficiency, the
absence of a provision against an equity investment and the benefits
accruing from increasing our participation in La Buenos Aires New York
Life, a life assurance company and Maxima, a pension fund manager to
that of a majority shareholder. Volumes grew considerably in higher
margin products including mortgages, loans secured on pledges, cheque
discounting and credit cards in part as a result of using the Maxima
sales force to cross-sell these products. As a result of the Brazilian
devaluation, commissions from trade facilities declined, offset in part
by stronger underwriting results in the motor insurance business. In
addition, gains of US$9 million were recorded on the sale of investment
securities in the first half of 1999. Operating expenses grew to support
volume growth and to strengthen the control environment.

The charge for bad and doubtful debts was in line with that for the same
period last year and overall credit demand remained subdued.

                                    Half-year      Half-year    Half-year 
                                           to             to           to
Figures in US$m                       30JUN99        30JUN98      31DEC98 
                                                                      
Net interest income                       582            507          688 
                                                                          
Dividend income                            11              9            - 
Net fees and commissions                  199            336          307 
Dealing profits                            40              9           (1)
Other income                              140            141          111 
Other operating income                    390            495          417 
                                                                          
Operating income                          972          1,002        1,105 
                                                                           
Staff costs                              (372)          (444)        (504)
Premises and equipment                    (76)           (90)        (101)
Other                                    (195)          (225)        (265)
Depreciation                              (37)           (38)         (44)
Operating expenses                       (680)          (797)        (914)
                                                                           
Operating profit before provisions        292            205          191 
                                                                          
Provisions for bad and doubtful debts     (64)           (75)        (118)
                                                                          
Provisions for contingent liabilities                                     
  and commitments                           -             (6)           5 
                                                                          
Amounts written off fixed asset                                           
  investments                               -              -           (1)
                                                                          
Operating profit                          228            124           77 
                                                                          
Income from associated undertakings        11             10           10 
                                                                          
Gains on disposal of investments and                                      
  tangible fixed assets                     9              8            5 
                                                                          
Profit before tax                         248            142           92 
                                                                          
Share of Group pre-tax profits            6.1%           3.8%         3.2%
                                                                          
Period end staff numbers (FTE basis)   27,208         24,946       26,572 
                                                                          
Cost:income ratio                        70.0%          79.5%        82.7%
                                                                          

Customer loans and advances and provisions                           
                                            AT           AT            AT 
Figures in US$m                        30JUN99      30JUN98       31DEC98 
                                                                             
Loans and advances to customers                                              
 (gross)                                 4,716        5,011         5,530    
                                                                             
Residential mortgages                      662          480           640    
Other personal                             778          810           888    
Total personal                           1,440        1,290         1,528    
Commercial, industrial and                                                   
  international trade                    1,991        2,497         2,602    
Commercial real estate                      66          152            62    
Other property related                     151           55           174    
Government                                 136           33           135    
Non-bank financial institutions             88           72           101    
Settlement accounts                         25           29            43    
Other commercial*                          819          883           885    
                                                                             
Specific provisions outstanding                                              
  against loans and advances               365          262           339    
                                                                             
Non-performing loans**                     422          313           403    
                                                                             
Specific provisions outstanding as a                                         
  percentage of non-performing loans**    86.5%        83.7%         84.1%  
                                                                             
Non-performing loans as a percentage                                         
  of gross loans and advances to                                             
  customers**                              8.9%         6.3%          7.3%  
                                                                             
Half-year bad and doubtful debt charge                                       
                                                                             
Loans and advances to customers                                            
-  specific charge:                                                        
   new provisions                          91            67            130 
   releases and recoveries                (24)            -            (28)
                                           67            67            102 
- general (releases)/charge                (3)            8             16 
Total bad and doubtful debt charge         64            75            118 
                                                                           
Customer bad debt charge as a
  percentage of closing gross loans
  and advances (annualised)               2.7%         3.0%           4.3%

*    Includes advances in respect of Agriculture, Transport, Energy and
     Utilities.

**   Net of suspended interest.

HSBC Holdings plc                                HSBC Investment Banking
_________________________________________________________________________

HSBC Investment Banking

Return on shareholders' funds improved to 19.6 per cent compared with
12.2 per cent in the second half of 1998 and 17.7 per cent in the first
half of 1998.

Pre-tax profits increased by US$19 million (6.4 per cent) over the first
half of 1998 and by US$135 million (74.6 per cent) over the
second half of 1998 to US$316 million. Attributable profits increased by
US$39 million, or 22.7 per cent, compared with the same period in 1998.

Our Corporate Finance and Advisory activities performed well,
contributing to a significant increase in fee income. Considerable
progress has been made in strengthening relationships with the large
corporate customers of the major banking operations within the HSBC
Group. This is now beginning to be reflected in increased fees.

Active equity markets contributed to strong levels of commissions and
significantly improved trading income. The Equities business performed
well across virtually all product areas with continued success in Europe
and significant improvements in the Far East. The development of
products for distribution through Group channels has already produced
results.

Funds under management in the Asset Management business increased by 5.8
per cent to US$66 billion compared with December 1998 and increased fee
income resulted in an improved profit contribution. Increased emphasis
is being given to retail mutual funds and unit trusts to be distributed
through the Group's retail branch networks.

Operating income from our Private Banking and Trustee business increased
7.1 per cent compared with the first half of 1998. This increase was
offset by increased bad debt provisions and the amortisation of goodwill
arising from the purchase of the 25 per cent minority in HSBC
Guyerzeller at the end of 1998, which resulted in a minor reduction in
pre-tax profit. However, the amortisation of goodwill was more than
offset by the reduced minority interest so that attributable profit
increased by US$4 million.

Private Equity disposed of a number of equity investments from its
portfolio, realising profits of US$47 million compared with US$71
million in the first half of 1998 and US$24 million in the second half 
of 1998.

Operating expenses increased by 15.9 per cent compared with the same
period in 1998 almost entirely as a result of increased compensation
costs linked to profit performance.


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