Subsid's Interim Results-Pt 2

HSBC HOLDINGS PLC
2 August 1999

Part 2

Hang Seng Bank Limited                Consolidated Profit and Loss Account
                                                               (Unaudited)
___________________________________________________________________________
                                                             
                                    Half-year     Half-year    Half-year 
                                        ended         ended        ended
Figures in HK$m                       30JUN99       30JUN98      31DEC98
                                                                              
                                              
Interest income                         13,949       15,780       16,500 
Interest expense                        (8,055)     (10,200)     (10,725)
Net interest income                      5,894        5,580        5,775 
Other operating income                   1,527        1,616        1,526 
Operating income                         7,421        7,196        7,301 
Operating expenses                      (1,741)      (1,845)      (2,020)
Operating profit before provisions       5,680        5,351        5,281 
Provisions for bad and doubtful debts     (789)        (902)      (1,574)
Operating profit                         4,891        4,449        3,707 
Profit/(loss) on disposal of tangible                                     
  fixed assets and long-term                                             
  investments                              121           53           (1)
Deficits on property revaluation             -          (86)        (219)
Share of profits less losses of                                          
  associated companies                      32           35           38 
Profit on ordinary activities before                                     
  tax                                    5,044        4,451        3,525 
Tax on profit on ordinary activities      (783)        (649)        (539)
Profit attributable to shareholders      4,261        3,802        2,986 
Dividends                               (3,059)      (2,678)      (3,862)
Retained profit for the period           1,202        1,124         (876)
                                                                        
Figures in HK$                                                          
                                                                        
Earnings per share                        2.23         1.99         1.56 
Dividends per share                       1.60         1.40         2.02 
                                                                        

Hang Seng Bank Limited               Financial Information Extracted from
                                           the Consolidated Balance Sheet
___________________________________________________________________________

                                                           
Figures in HK$m                    At 30JUN99  At 30JUN98   At 31DEC98 
                                                                      
Cash and short-term funds             108,152      94,121      108,156 
Placings with banks maturing after                                    
  one month                            61,055      47,505       52,543 
Advances to customers                 197,280     201,495      198,069 
Long-term investments                  24,260      19,355       20,871 
Other assets                            8,114       7,903        7,289 
Total assets                          435,454     408,617      422,721 
Current, savings and other deposit                                    
  accounts                            364,951     343,931      352,288 
Shareholders' funds                    47,387      48,159       45,505 
                                                                       

Hang Seng Bank Limited                                    Financial Review
___________________________________________________________________________

Net interest income

                                  Half-year   Half-year   Half-year 
                                      ended       ended       ended
Figures in HK$m                     30JUN99     30JUN98     31DEC98 
                                                                       
Net interest income                   5,894        5,580      5,775 
Average interest-earning assets     401,384      373,517    394,165 
Net interest spread                    2.43%        2.25%      2.19%
Net interest margin                    2.96%        3.01%      2.91%

Net interest income increased by HK$314 million, or 5.6 per cent,
compared with the first half of 1998. The positive impact of
an increase in average interest-earning assets, mainly in
short-term funds and placings with banks, of HK$27.9 billion
or 7.5 per cent outweighed the unfavourable impact of the
reduction in interest margin of five basis points.

Net interest spread increased by 18 basis points and benefited from
the widening of the gap between best lending rate (BLR) and
HIBOR, growth in BLR-based residential mortgages, an increase
in low cost savings deposits and an improvement in the spread
on time deposits, notwithstanding the increase in interest
suspended on non-performing advances and the reduction in the
average ratio of advances to deposits.

Contribution from net free funds decreased by 23 basis points due
to lower average interest rates partly offset by the positive
impact of an increase in net free funds.
                                                             
Other operating income

                                    Half-year     Half-year    Half-year 
                                        ended         ended        ended
Figures in HK$m                       30JUN99       30JUN98      31DEC98 
                                                                              
                                                              
Dividend income                                                           
- Listed investments                       50            69           38 
- Unlisted investments                      3             1            2 
                                           53            70           40 
Fees and commissions receivable           868           828          841 
Fees and commissions payable             (155)         (152)        (125)
Net fees and commissions receivable       713           676          716 
Dealing profits                                                           
- Foreign exchange                        277           294          304 
- Securities and other trading                                            
  activities                                7           (14)          13 
Net dealing profits                       284           280          317 
Rental income from investment                                             
  properties                              125           134          123 
Other                                     352           456          330 
                                        1,527         1,616        1,526 

Net fees and commissions remained resilient with an increase of
HK$37 million or 5.5 per cent despite the adverse economic
environment. There were increases in fees from newly launched
retail investment funds, stockbroking and account services
which were partly offset by decreases in fees from credit
facilities, trade finance and cards.

Dealing profits rose by HK$4 million, or 1.4 per cent, with
improvements in securities and equities trading outweighing a
decrease in foreign exchange profits.

Other operating income decreased because of the non-recurrence of
profit made on the termination of interest rate swaps made in
the first half of 1998 and a decrease in insurance profits.

Operating expenses

                                  Half-year   Half-year  Half-year 
                                      ended       ended      ended
Figures in HK$m                     30JUN99     30JUN98    31DEC98 
                                                                  
Staff costs                                                        
- Salaries and other costs              939         961        944 
- Retirement benefit costs              116         141        300 
                                      1,055       1,102      1,244 
Premises and equipment                                             
- Depreciation                          185         208        198 
- Rental expenses                        76          79         77 
- Other                                 258         258        273 
                                        519         545        548 
Other operating expenses                167         198        228 
                                      1,741       1,845      2,020 
                                                                     
Cost:income ratio                      23.5%       25.6%      27.7%
                                                                    
Staff numbers (full-time equivalent)  7,562       7,926      7,795 

Operating expenses decreased by HK$104 million, or 5.6 per cent, as
a result of careful cost control. Staff costs fell by HK$47
million, or 4.3 per cent, with a reduction in headcount of
364 staff on a full-time equivalent basis since the end of
June 1998 as a result of natural attrition. Premises and
equipment expenses fell by HK$26 million, or 4.8 per cent,
mainly due to lower depreciation charges on bank premises
following the fall in property values in 1998 and lower
maintenance expenses. Other operating expenses decreased by
HK$31 million, or 15.7 per cent, mainly due to lower business
promotion expenses. The cost:income ratio was 23.5 per cent
(a record low since this ratio was first published in 1989)
compared with 25.6 per cent in the first half of 1998 and
27.7 per cent in the second half.

Provisions for bad and doubtful debts

                                  Half-year    Half-year     Half-year 
                                      ended        ended         ended
Figures in HK$m                     30JUN99      30JUN98       31DEC98 
                                                                        
Net charge/(release)                                                    
                                                                        
Specific provisions against advances                                    
  to customers                          796          917         1,592 
General provisions against advances                                       
  to customers                           (7)         (15)          (18)
Total net charge                        789          902         1,574 
                                                                         

The net charge for bad and doubtful debts decreased by HK$113
million, or 12.5 per cent, with a reduction of HK$121 million
in specific provisions. During the period, specific
provisions made for trade finance, corporate lending and hire
purchase loans decreased but additional provisions were made
in respect of mainland China-related exposures and
residential mortgages. Releases of general provisions of HK$7
million and HK$15 million were recorded in the current period
and the same period last year respectively, reflecting a
contraction in customer advances.

Profit/(loss) on disposal of tangible fixed assets and long-term
investments

                                  Half-year    Half-year     Half-year 
                                      ended        ended         ended
Figures in HK$m                     30JUN99      30JUN98       31DEC98 
                                                                          
Profit on disposal of long-term                                           
  investments                           126           64             1 
Loss on disposal of tangible fixed                                        
  assets                                 (5)         (11)           (2)
                                        121           53            (1)
                                                                         
Profit on disposal of tangible fixed assets and long-term
investments rose by HK$68 million to HK$121 million compared
with the same period last year, due to the increase in profit
on disposal of locally-listed equities and the sale of an
unlisted equity investment.
                                                             
Taxation

Taxation in the consolidated profit and loss account represents:

                                   Half-year     Half-year      Half-year 
                                       ended         ended          ended
Figures in HK$m                      30JUN99       30JUN98        31DEC98 
        
Provision for Hong Kong profits tax      779           643            574 
Taxation outside Hong Kong                 1             1              1 
Deferred taxation                          -             -            (41)
                                         780           644            534 
Share of associated companies'                                            
  taxation                                 3             5              5 
Total charge for taxation                783           649            539 
                                                                          
Effective tax rate                      15.5%         14.6%          15.3%
                                                                          

The provision for Hong Kong profits tax was made at 16.0 per cent
(the same rate as for the first half of 1998) based on an
estimate of the assessable profits for the period ended
30 June 1999. Similarly, taxation provisions for subsidiary
companies and branches outside Hong Kong are made at the
appropriate rates of taxation prevailing in the countries in
which they operate.

The effective tax rate for the first half of 1999 increased to 15.5
per cent from 14.6 per cent for the first half of 1998, as
certain provisions for bad and doubtful debts in respect of
advances made by the mainland China branches are not expected
to be tax-deductible in the current year.


Earnings per share

The calculation of earnings per share is based on earnings of
HK$4,261 million (HK$3,802 million in the first half of 1998) 
and on the weighted average number of ordinary shares in issue of
1,911,842,736 shares (1,913,175,936 shares in the first half of 1998).
                                                             
Dividends per share

                             Half-year       Half-year       Half-year
                                 ended           ended           ended
                               30JUN99         30JUN98         31DEC98
                                                                 
                             HK$  HK$m      HK$   HK$m       HK$  HK$m
                       per share      per share        per share
                                                                       
Dividends                   1.60 3,059     1.40  2,678      2.02 3,862
                                      
The calculation of dividends per share is based on the interim
dividend payable of HK$3,059 million and on 1,911,842,736
shares in issue at 30 June 1999 (interim dividend of HK$2,678
million and 1,913,175,936 shares in issue at 30 June 1998).
The difference in the number of shares in issue represents
the repurchase of 1,333,200 shares during the second half of
1998.


Cash and short-term funds
                                                             
Figures in HK$m                     At 30JUN99  At 30JUN98  At 31DEC98
                                                                       
Cash in hand and balances with banks                                   
  and other financial institutions       3,229       3,972       3,282 
Money at call and placings with                                        
  banks maturing within one month       91,929      81,782      88,224 
Treasury bills                          12,994       8,367      16,650 
                                       108,152      94,121     108,156 
                                                                       

Placings with banks maturing after one month

Figures in HK$m                    At 30JUN99   At 30JUN98  At 31DEC98
                                                                    
Remaining maturity:                                                 
- Three months or less but over                                      
    one month                          25,084       31,772      30,416 
- One year or less but over three                                    
    months                             35,879       15,332      21,974 
- Five years or less but over one       
    year                                   92          401         153
                                       61,055       47,505      52,543 
                                                                      
Cash and short-term funds were maintained at the same level as at
the end of 1998, reflecting the net effect of a reduction in
holdings of treasury bills and an increase in money at call
and placings with banks maturing within one month. Placings
with banks maturing after one month increased by HK$8,512
million, financed by the growth in customer deposits during
the period.
                                                             
Advances to customers
                                 
Figures in HK$m                  At 30JUN99   At 30JUN98    At 31DEC98        
                             
Advances to customers               201,835      204,994       202,605 
Specific provisions                  (3,113)      (2,032)       (3,087)
General provisions                   (1,442)      (1,467)       (1,449)
                                    197,280      201,495       198,069 
                                                                       
Advances to customers (net of suspended interest and provisions)
declined marginally by HK$789 million, or 0.4 per cent,
compared with 31 December 1998. Corporate lending and trade-
related advances fell in the current economic downturn. This
was compensated for by continued growth in residential
mortgages, including those under the Government Home
Ownership Scheme, as the primary property market remained
active.

Provisions against advances to customers

Figures in HK$m                       Half-year ended 30 June 1999     
                                 Specific  General     Total   Suspended 
                                                                interest 
                                                                             
At 1 January 1999                  3,087     1,449     4,536         509     
Amounts written off                 (776)        -      (776)       (169)
Recoveries of advances                                                       
  written off in previous years        5         -         5           -
Charge/(release) to profit and                                               
  loss account                       796        (7)      789           -     
Interest suspended during the                                                
  period                               -         -         -         294     
Suspended interest recovered           -         -         -         (36)
Exchange adjustment                    1         -         1           -     
At 30 June 1999                    3,113     1,442     4,555         598 

Suspended interest above comprises both suspended interest netted
against advances to customers and suspended interest netted
against accrued interest receivable in prepayments and
accrued income.

Total provisions as a percentage of gross advances to customers are
as follows:
                                  At 30JUN99   At 30JUN98   At 31DEC98 

                                           %            %           %         
Specific provisions                      1.6          1.0         1.5
General provisions                       0.7          0.7         0.7
Total provisions                         2.3          1.7         2.2

Total provisions as a percentage of gross advances to customers
increased moderately by 0.1 percentage point to 2.3 per cent
compared with 2.2 per cent at 31 December 1998, attributable
to the increase in specific provisions by 0.1 percentage
point to 1.6 per cent. General provisions were maintained at
0.7 per cent, comprising normal provisions at the rate of 0.6
per cent and an additional provision of HK$250 million made
in 1997.

Non-performing advances to customers and provisions

Non-performing advances to customers on which interest has been
placed in suspense or on which interest accrual has ceased
are as follows:
 
Figures in HK$m                    At 30JUN99 At 30JUN98 At 31DEC98
                                                                        
Gross non-performing advances on                                        
  which interest                                                        
- has been placed in suspense           8,161      3,715      7,788 
- accrual has ceased                      230          -        235 
                                        8,391      3,715      8,023 
Suspended interest                       (239)      (144)      (182)
Gross non-performing advances                                       
  (net of suspended interest)(page 16)  8,152      3,571      7,841 
Specific provisions                    (3,113)    (2,032)    (3,087)
Net non-performing advances             5,039      1,539      4,754 
                                                                    
Specific provisions as a percentage of                              
   gross non-performing advances                                     
   (net of suspended interest)           38.2%      56.9%      39.4%
                                                                    
Gross non-performing advances                                       
   (net of suspended interest) as a
   percentage of gross advances to                                   
   customers                               4.0%      1.7%       3.9%
                                                                     

Gross non-performing advances (net of suspended interest) increased
by HK$311 million to HK$8,152 million, reflecting a slowdown
in the growth of non-performing advances and the amounts
written off during the first half of 1999. This represents
4.0 per cent of gross advances to customers (3.9 per cent at
31 December 1998). Specific provisions made in respect of non-
performing advances take into account the value of collateral
held.

Non-performing advances to customers are those advances where full
repayment of principal or interest is considered unlikely.
Non-performing advances may include advances that are not yet
more than three months overdue but are considered doubtful.
Advances are classified as non-performing as soon as it
becomes apparent that full recovery of the advances is
unlikely. Except in certain limited circumstances, all
advances on which principal or interest is more than three
months overdue are classified as non-performing.

Overdue advances to customers

The amount of advances to customers which are overdue for more than
three months and its expression as a percentage of gross
advances to customers are as follows:

                                 At 30JUN99       At 30JUN98     At 31DEC98
                                  HK$m      %      HK$m    %     HK$m      % 
                                                                         
Gross advances to                                                        
  customers*which have been                                              
  overdue with respect to                                                
  either principal or                                                    
  interest for periods of    
- six months or less but                                                 
  over three months              1,514    0.8      717   0.3    1,533    0.8 
- one year or less but over                                              
  six months                     3,529    1.7      279   0.1    1,304    0.6 
- over one year                  1,395    0.7    1,540   0.8    1,156    0.6 
                                 6,438    3.2    2,536   1.2    3,993    2.0 
                                                                        
Overdue advances to                                                         
  customers (as above)           6,438    3.2    2,536   1.2    3,993    2.0 
Less: overdue advances on                                                   
  which interest is still                                                   
  being accrued                   (472)  (0.3)    (566) (0.3)    (428)  (0.2)
Add: advances which have                                                    
  been overdue with                                                         
  respect to either                                                         
  principal or interest for                                                 
  periods of three                                                          
  months or less                  753    0.4      681   0.3    2,054    1.0 
Add:  advances which are                                                    
  not yet overdue               1,433    0.7      920   0.5    2,222    1.1 
Gross non-performing                                                        
  advances (page 15)            8,152    4.0    3,571   1.7    7,841    3.9 
                                                                        

* Gross advances to customers are stated after deduction of
  suspended interest.

Rescheduled advances to customers

The amount of rescheduled advances and its expression as a
percentage of gross advances to customers are as follows:

                               At 30JUN99    At 30JUN98    At 31DEC98
                               HK$m     %     HK$m    %     HK$m    %
Rescheduled advances                                                   
  to customers (net of                                               
  suspended interest)           725   0.4      763  0.4      869  0.4

Rescheduled advances are those advances which have been
restructured because of a deterioration in the financial
position of the borrower, or because of the inability of the
borrower to meet the original repayment schedule.

Rescheduled advances to customers are stated net of any advances
that have subsequently become overdue for over three months
and are included in overdue advances to customers.

Rescheduled advances are stated net of suspended interest and
before deduction of specific provisions.

Advances to customers by industry sectors

The analysis of advances to customers by industry sectors (net of
suspended interest) based on categories and definitions  used
by the Hong Kong Monetary Authority are as follows:

                                            At         At         At
Figures in HK$m                        30JUN99    30JUN98    31DEC98
                                                                    
Advances to customers for use in                                    
  Hong Kong                                                         
Industrial, commercial and financial                                
  sectors                                                           
- Property development                  15,230     16,759    14,691 
- Property investment                   22,677     24,752    24,844 
- Financial concerns                     3,364      3,561     3,388 
- Stockbrokers                             261        168       119 
- Wholesale and retail trade             4,865      5,792     5,154 
- Manufacturing                          1,967      2,756     2,263 
- Transport and transport equipment      7,935      8,194     8,558 
- Others                                18,528     19,621    17,684 
                                        74,827     81,603    76,701 
                                                                    
Individuals                                                         
- Advances for the purchase of flats                                
  under the Government Home                                         
  Ownership Scheme and Private Sector                               
  Participation Scheme                  32,252     27,378    31,229 
- Advances for the purchase of other                                
  residential properties                73,548     69,463    71,864 
- Credit card advances                   3,492      3,490     3,616 
- Others                                 4,475      5,849     4,433 
                                       113,767    106,180   111,142 
Total advances for use in Hong Kong    188,594    187,783   187,843 
Trade finance                            9,702     12,572    10,512 
Advances for use outside Hong Kong       3,539      4,639     4,250 
Gross advances to customers            201,835    204,994   202,605 
                                                                    

Advances to the industrial, commercial and financial sectors
continued to contract, reflecting weak loan demand and the
bank's cautious approach in lending. Trade finance fell
further in line with the territory's poor trade performance.
Residential mortgages, including those under the Government
Home Ownership Scheme, recorded steady growth, benefiting
from the active primary property market.

Long-term investments

Figures in HK$m                   At 30JUN99 At 30JUN98    At 31DEC98
                                                                       
Debt securities held to maturity                                       
Issued by public bodies                                                
- Central governments and central     
  banks                                1,938      1,771           957
- Other public sector entities         4,658      5,216         6,468 
                                       6,596      6,987         7,425 
Issued by other bodies                                                
- Banks and other financial            
  institutions                         9,754      7,579         7,365
- Corporate entities                   3,832      2,115         2,447 
                                      13,586      9,694         9,812 
                                      20,182     16,681        17,237 
Equity investments                                                    
Issued by corporate entities           4,078      2,674         3,634 
Total                                 24,260     19,355        20,871 
Debt securities held to maturity                                      
- Listed in Hong Kong                    257        257           257 
- Listed outside Hong Kong             1,856      1,217         2,461 
                                       2,113      1,474         2,718 
- Unlisted                            18,069     15,207        14,519 
                                      20,182     16,681        17,237 
Equity investments                                                    
- Listed in Hong Kong                  3,924      2,376         3,356 
- Listed outside Hong Kong                94         71            68 
                                       4,018      2,447         3,424 
- Unlisted                                60        227           210 
                                       4,078      2,674         3,634 
Total                                 24,260     19,355        20,871 
                                             
Debt securities held to maturity are stated at cost, adjusted to
give effect to the amortisation of premiums and accretion of
discounts over the period from the date of purchase to the
date of redemption.

Hang Seng has adopted Statement of Standard Accounting Practice 24
(SSAP 24) issued by the Hong Kong Society of Accountants
which was effective from 1 January 1999. To comply with SSAP
24, long-term equity investments, which are defined as those
not held for trading purposes and which were previously
stated in the balance sheet at cost less provisions for
permanent diminution in value, are now stated at fair value
and the revaluation gains and losses are taken to the
investment revaluation reserve. The carrying values of long-
term equity investments at 31 December 1998 and at 30 June
1998 have been restated on the basis of the new accounting
policy.

The following table shows the fair value of debt securities held to
maturity:

                                              Fair value            
             
Figures in HK$m                      At 30JUN99 At 30JUN98   At 31DEC98
                                                                     
Debt securities held to maturity                                     
Issued by public bodies                                              
- Central governments and central banks   1,941      1,747         967 
- Other public sector entities            4,672      5,200       6,519 
                                          6,613      6,947       7,486 
Issued by other bodies                                              
- Banks and other financial institutions  9,736      7,464       7,362 
- Corporate entities                      3,814      1,993       2,409 
                                         13,550      9,457       9,771 
                                         20,163     16,404      17,257 
                                                                    
Debt securities held to maturity                                    
- Listed in Hong Kong                       256        242         254 
- Listed outside Hong Kong                1,853      1,187       2,445 
                                          2,109      1,429       2,699 
- Unlisted                               18,054     14,975      14,558 
                                         20,163     16,404      17,257 
Other assets

Figures in HK$m                      At 30JUN99 At 30JUN98  At 31DEC98
                                                                       
Unrealised gains on off-balance sheet                                  
  interest rate, exchange rate and                                     
  other derivative contracts which are                                       
  marked to market                         796         859      1,207 
Items in the course of collection                                      
  from other banks                       3,364       3,712      2,514 
                                           
Prepayments and accrued income           2,850       2,630      3,229 
                                           
Other accounts                           1,104         702        339 
                                                               
                                         8,114       7,903      7,289 
                                                                              
Current, savings and other deposit accounts

Figures in HK$m                    At 30JUN99   At 30JUN98 At 31DEC98 
                                                                          
Customer accounts                      353,090     335,495    341,573 
Certificates of deposit in issue        11,861       8,436     10,715 
                                       364,951     343,931    352,288 

Current, savings and other deposit accounts increased by HK$12,663
million, or 3.6 per cent, compared with the end of 1998. The growth was
mainly in Hong Kong dollar and US dollar deposits. Certificates of deposit
in issue increased by HK$1,146 million to HK$11,861 million.

Shareholders' funds

Figures in HK$m                    At 30JUN99   At 30JUN98      At 31DEC98
                                                                           
Share capital                           9,559        9,566           9,559 
Retained profits                       26,252       25,869          25,005 
Investment revaluation reserve          3,098        1,430           2,423 
Premises and investment properties                                          
  revaluation reserves                  8,379       11,202           8,419 
Capital redemption reserve                 99           92              99 
                                       47,387       48,159          45,505 

Shareholders' funds rose by HK$1,882 million, or 4.1 per cent.
Retained profits grew by HK$1,247 million, or 5.0 per cent,
over the first half of 1999. Investment revaluation reserve
increased by HK$675 million reflecting the rise in the Hong
Kong equity market. The investment revaluation reserve was
created following the adoption of SSAP 24 as explained in the
note on long-term investments on page 19. Due to the change
in accounting policy, prior-year adjustments had been made to
long-term investments and shareholders' funds at 31 December
1998 and 30 June 1998.

Contingent liabilities, commitments and derivatives

Figures in HK$m                               At 30 June 1999            

                                                    Credit       Risk- 
                                    Contract    equivalent    weighted
                                      amount        amount      amount 
                                                                        
Contingent liabilities:                                                 
Guarantees                             2,170        2,086       1,081 
                                                                      
Commitments:                                                          
Documentary credits and short-term                                    
  trade-related transactions           5,128        1,031       1,026 
Undrawn formal standby facilities,                                    
  credit lines and other                                              
  commitments to lend:                                                
- under one year                      54,217            -           -
- one year and over                    8,694        4,347       4,347 
Other                                      -            -           - 
                                      68,039        5,378       5,373 
                                                                      
Exchange rate contracts:                                              
Spot and forward foreign exchange    112,132        1,633         359 
Other exchange rate contracts            984            7           1 
                                     113,116        1,640         360 
                                                                      
Interest rate contracts:                                              
Interest rate swaps                   20,591          163          34 
Other interest rate contracts         10,005            2           1 
                                      30,596          165          35 
                                                                      
Other derivative contracts               323           20          10 
                                                                        

Figures in HK$m                            At 30 June 1998            

                                                   Credit       Risk- 
                                  Contract     equivalent    weighted
                                    amount         amount      amount 
                                                                        
Contingent liabilities:                                                 
Guarantees                           3,132          2,791       2,485 
                                                                      
Commitments:                                                          
Documentary credits and short-term                                    
  trade-related transactions         5,824          1,167       1,165 
Undrawn formal standby facilities,                                    
  credit lines and other                                              
  commitments to lend:                                                        
      
- under one year                    63,879              -           -
- one year and over                  8,701          4,350       4,350 
Other                                  174            174         174 
                                    78,578          5,691       5,689 
                                                                      
Exchange rate contracts:                                              
Spot and forward foreign exchange  134,699          1,711         402 
Other exchange rate contracts          609              7           2 
                                   135,308          1,718         404 
                                         
                                                                      
Interest rate contracts:                                              
Interest rate swaps                 18,818            217          38 
Other interest rate contracts        2,739              1           - 
                                    21,557            218          38 
                                                                      
Other derivative contracts             328             26          13 
                                                                        

Figures in HK$m                            At 31 December 1998          
                                                   Credit       Risk- 
                                  Contract     equivalent    weighted
                                    amount         amount      amount 
                                                                        
Contingent liabilities:                                                 
Guarantees                           1,945          1,870       1,536 
                                                                      
Commitments:                                                          
Documentary credits and short-term                                    
  trade-related transactions         4,940            990         988 
Undrawn formal standby facilities,                                    
  credit lines and other                                              
  commitments to lend:                                                        
      
- under one year                    56,074              -           - 
- one year and over                  7,606          3,803       3,803 
Other                                  174            174         174 
                                    68,794          4,967       4,965 
                                                                      
Exchange rate contracts:                                              
Spot and forward foreign exchange  104,539          1,864         437 
Other exchange rate contracts          274             10           3 
                                   104,813          1,874         440 
                                                                      
Interest rate contracts:                                              
Interest rate swaps                 19,190            237          49 
Other interest rate contracts        5,239              -           - 
                                    24,429            237          49 
                                                                      
Other derivative contracts             329             20          10 
                                  
The tables above give the nominal contract amounts, credit
equivalent amounts and risk-weighted amounts of off-balance
sheet transactions. The credit equivalent amounts are
calculated for the purposes of deriving the risk-weighted
amounts. These are assessed in accordance with the Third
Schedule of the Banking Ordinance on capital adequacy and
depend on the status of the counterparty and the maturity
characteristics. The risk weights used range from 0 per cent
to 100 per cent for contingent liabilities and commitments,
and from 0 per cent to 50 per cent for exchange rate,
interest rate and other derivative contracts.

Contingent liabilities and commitments are credit-related
instruments which include acceptances, letters of credit,
guarantees and commitments to extend credit. The risk
involved is essentially the same as the credit risk involved
in extending loan facilities to customers; these transactions
are, therefore, subject to the same credit origination,
portfolio maintenance and collateral requirements as for
customers applying for loans.

As the facilities may expire without being drawn upon, the 
total of the contract amounts is not representative of future
liquidity requirements.

Off-balance sheet financial instruments arise from futures,
forward, swap and option transactions undertaken in the
foreign exchange, interest rate and equity markets.

The contract amounts of these instruments indicate the volume of
transactions outstanding at the balance sheet date and do not
represent amounts at risk.

The credit equivalent amount of these instruments is measured as
the sum of positive mark-to-market values and the potential
future credit exposure in accordance with the Third Schedule
of the Banking Ordinance.

Figures in HK$m                 At 30JUN9   At 30JUN98     At 31DEC98
                                                                        
Replacement cost                                                        
Exchange rate contracts                806         790          1,168 
Interest rate contracts                117         181            207 
Other derivative contracts               -           -              - 
                                       923         971          1,375 
                                                                       
The replacement cost of contracts represents the mark-to-market
assets on all contracts (including non-trading contracts)
with a positive value and which have not been subject to any
bilateral netting arrangement.

Hang Seng Bank Limited                             Additional Information
_________________________________________________________________________

1  Accounting policies

The accounting policies adopted are consistent with those described
in the Financial Review, Directors' Report and Accounts for
1998 except for a change in the accounting policy for long-
term equity investments which has been amended in accordance
with SSAP 24.

Long-term equity investments, which are defined as those not held
for trading purposes, were previously included in the balance
sheet at cost less provisions for any permanent diminution in
value. Following the implementation of SSAP 24, long-term
equity investments are carried at their fair values. Gains
and losses on long-term equity investments arising from
changes in fair value are accounted for as movements in the
investment revaluation reserve until the investment is sold
or until the investment is determined to be impaired at which
time the cumulative gain or loss is included in the profit
and loss account for the period.

Following the change in accounting policy, a prior-year adjustment
has been made to long-term investments and shareholders' funds 
at 31 December 1998 and 30 June 1998.


2  Comparative figures

Certain comparative figures have been reclassified to conform with
the current period's presentation.


3  Capital ratios

The capital ratios for both 1999 and 1998 take account of market
risks in accordance with the relevant Hong Kong Monetary
Authority guideline. Tier 1 capital includes the investment
revaluation reserve arising from the change in accounting
policy referred to in note 1 above. The capital ratios for 31
December 1998 and 30 June 1998 have been restated on a
consistent basis.


4  Year 2000 readiness

Hang Seng has adopted the Year 2000 conformity requirements issued
by the British Standards Institution as its definition of
Year 2000 compliance.

The objective of Hang Seng's Year 2000 compliance programme is to
ensure that there is no disruption to Hang Seng's services in
the change-over to the new millennium. A steering committee,
with representatives from key business units, monitors the
progress of the programme, which is reported regularly to the
Board of Directors and the Audit Committee.

The programme involves testing all of Hang Seng's own relevant
systems to ensure that they are Year 2000 compliant.
Suppliers and service providers have been asked to confirm
that their products and services are Year 2000 compliant.
Hang Seng has also been assessing its customers' commitment
to becoming Year 2000 compliant and has been providing information 
and assistance to help customers understand the risks
and issues. As part of the programme,the Year 2000 compliance
programmes of the various clearing and central depository
systems in which Hang Seng participates are also being monitored.
Hang Seng will continue to participate in external interface 
testing with these systems, where possible, during 1999.

To date, Hang Seng's own relevant computer systems have been
successfully tested to the relevant British Standards
Institution requirements for Year 2000 compliance. Software
systems installed at Hang Seng provided by outside companies
have also been tested and Hang Seng believes these systems
will work on 1 January 2000.

In addition, contingency plans have been made for the weekend of
the millennium to mitigate, for example, a problem with a
computer system supplied by an outside company and the possibility
of the failure of systems or processes outside Hang Seng's
control. These plans will continue to be refined and tested 
throughout 1999.

Lack of readiness on the part of third parties could expose 
Hang Seng to the potential for loss, impairment of business 
processes and activities and disruption of financial markets.
Hang Seng is addressing these risks through bilateral and 
multiparty efforts and participates in industry and global
initiatives.

For a number of years Hang Seng has been modifying systems to be
Year 2000 compliant when making other enhancements. The costs
of the Year 2000 modifications incurred as part of such a
combined package have not been separately identified. For the
first half of 1999, costs incurred on Year 2000
modifications, which have been separately identified, total
HK$0.4 million. For the period from 1 January 1998 to 30 June
1999, costs incurred on Year 2000 modifications, which have
been separately identified, total HK$24 million (including
HK$10 million attributable to incremental external costs).
All modification costs are charged as expenses except for
capital equipment purchases. Adequate budgets have been
provided and spent according to plan. Costs relating to major
systems changes that are not directly related to the Year
2000 but which address some Year 2000 issues are not included
in these costs.

At 30 June 1999, the value of commitments in respect of Year 2000
modification costs authorised by the Directors and contracted
for, or authorised by the Directors but not yet contracted
for, was not material.

5  Statutory accounts

The information in this news release is unaudited and does not
constitute statutory accounts.

Certain financial information in this news release is extracted
from the statutory accounts for the year ended 31 December
1998, which have been delivered to the Registrar of Companies
and the Hong Kong Monetary Authority. The auditors expressed
an unqualified opinion on those statutory accounts in their
report dated 22 February 1999.


6  Ultimate holding company

Hang Seng Bank is an indirectly-held, 62.14 per cent-owned
subsidiary of HSBC Holdings plc.


7  Statement of compliance

The information in this news release for the half-year ended 30
June 1999 complies with the Hong Kong Monetary Authority
recommendations set out in the Best Practice Guide on Interim
Financial Disclosure by Authorised Institutions.


8  Register of shareholders

The Register of Shareholders of Hang Seng Bank will be closed from
Friday 27 August 1999 to Friday 3 September 1999, both dates
inclusive, during which period no transfer of shares can be
registered. In order to qualify for the interim dividend, all
transfers, accompanied by the relevant share certificates,
must be lodged with the bank's Registrars, Central
Registration Hong Kong Limited, Shops 1712-1716, 17th Floor,
Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong,
for registration not later than 4:00 pm on Thursday 26 August
1999. The interim dividend will be payable on Monday 6
September 1999 to shareholders on the Register of
Shareholders of the bank on Friday 3 September 1999.


9  News release

Copies of the full results announcement may be obtained from the
Company Secretary Department, Level 10, 83 Des Voeux Road
Central, Hong Kong. The 1999 Interim Report will be sent to
shareholders in late August 1999.