SABB first half 2007 results

HSBC Holdings PLC
10 July 2007

The following news release was issued today by The Saudi British Bank (SABB), 
a 40 per cent indirectly held associate of HSBC Holdings plc.

                              THE SAUDI BRITISH BANK
                      FIRST HALF 2007 RESULTS - HIGHLIGHTS

• Net profit of SAR1,251 million (US$334 million) for the six months ended 30 June
  2007 - down SAR558 million (US$148 million), or 30.8 per cent, compared with
  SAR1,809 million (US$482 million) for the same period in 2006.

• Net profit of SAR635 million (US$170 million) for the three months ended 30 June
  2007 - down SAR188 million (US$49 million), or 22.8 per cent, compared with
  SAR823 million (US$219 million) for the same period in 2006.

• Operating income of SAR2,055 million (US$548 million) for the six months ended
  30 June 2007 - down SAR573 million (US$153 million), or 21.8 per cent, compared
  with SAR2,628 million (US$701 million) for the same period in 2006.

• Customer deposits of SAR65.2 billion (US$17.4 billion) at 30 June 2007 - up
  SAR10.1 billion (US$2.7 billion), or 18.3 per cent, compared with SAR55.1
  billion (US$14.7 billion) at 30 June 2006.

• Loans and advances to customers of SAR48.6 billion (US$13.0 billion) at 30 June
  2007 - up SAR9.5 billion (US$2.6 billion), or 24.3 per cent, from SAR39.1
  billion (US$10.4 billion) at 30 June 2006.

• The bank's investment portfolio totalled SAR16.4 billion (US$4.4 billion) at 30
  June 2007 compared with SAR15.3 billion (US$4.1 billion) at 30 June 2006.

• Total assets of SAR85.1 billion (US$22.7 billion) at 30 June 2007 - up SAR12.3
  billion (US$3.3 billion), or 16.9 per cent, over 30 June 2006.

• Earnings per share of SAR3.34 (US$0.89) for the six months ended 30 June 2007 -
  down 30.8 per cent from SAR4.82 (US$1.29) for the same period in 2006.

Commentary

SABB recorded a net profit of SAR1,251 million (US$334 million) for the six
months ended 30 June 2007. This represents a 30.8 per cent decline compared with
the first half of 2006. However, net profit in the first half of 2007 increased
by 1.6 per cent compared with the second half of 2006.

John Coverdale, managing director of SABB, said: "I am greatly encouraged by the
progress that SABB has made during the first half of 2007 especially with regard
to core banking activities. The 24.3 per cent increase in loans and advances
compared to 30 June 2006, together with customer deposit growth, has generated a
sustainable SAR221 million, or 17.3 per cent, increase in net interest income
and positions SABB well for the future. Brokerage and mutual funds business
continues to be subdued, significantly reducing SABB's first half 2007 profits,
but core-banking non-funds income has grown by SAR28 million or 9.2 per cent
compared to the first half of 2006.

"Our cost base has reduced by SAR91 million, or 12.4 per cent, due to last
year's one-off cost of re-branding the bank and lower 2007 profit-related bonus
accruals. Increased bad debts reflect growth in our card and consumer loan book
and our penetration of new market sectors. However, overall credit quality is
sound, supported by the strong underlying Saudi economy that is also helping to
drive high levels of corporate activity, particularly in the construction and
infrastructure development sectors.

"The market remains very liquid but SABB has effectively used the increase in
customer deposits over the last year to fund loan growth. The bank's capital and
liquidity positions remain strong.

"We are pleased to announce that our insurance company, SABB Takaful, has
obtained all necessary operating authorisations and began trading on 1 July
2007. This, together with the 2006 formation of our joint venture investment
bank, HSBC Saudi Arabia Limited, is a major step towards our goal of becoming a
comprehensive provider of financial services to our clients within the Kingdom.

"We thank our customers for their continued support, and our staff for their
commitment and contribution to the bank's success."

SABB's Board of Directors has recommended an interim dividend of SAR1.50 per
share for the first half of 2007, after the deduction of Zakat.







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