2000 Interim Report - Part 2

HSBC Hldgs PLC
11 August 2000


PART 2

HSBC Holdings plc
2000 Interim Report (continued)


12.  Subsequent events

On 28 July, HSBC completed its acquisition of Credit Commercial de
France (CCF) and now holds 98.6 per cent of CCF's issued share
capital, based on a total number of CCF shares of 74,861,002 at 12
July 2000. A total of 678,173,769 new HSBC US$0.50 ordinary shares
have been issued in respect of acceptances of the share offer.
These shares will be eligible to participate in the first interim
dividend for 2000. This will add US$102 million to the dividend
accrued as at 30 June 2000.

Under CCF's executive share option scheme, there remain
outstanding 3,727,525 options to subscribe for CCF shares. Under
agreements entered into with holders of such options, HSBC will
acquire the CCF shares as and when they are issued upon exercise
of the options, principally through exchange into HSBC US$0.50
ordinary shares at the same exchange ratio as under the share
offer. The options are exercisable for up to 10 years from the
date on which they were granted. Up to a further 42,672,825 HSBC
shares may be made available to holders of options in this way.
HSBC is considering providing HSBC shares for this purpose by
transfer from an employee benefit trust. In that event, HSBC may
propose to the trustee that the trust should purchase in the
market the HSBC shares required.

On 15 July 2000, HSBC Bank plc agreed to sell its 20 per cent
investment in British Interactive Broadcasting (Holdings) Limited
for a consideration in shares, loan notes, or cash valued at
US$379 million plus, subject to certain performance conditions, a
further US$114 million. The sale is subject to regulatory approval
and the consideration is receivable in instalments over a maximum
period of three years from completion.



13.  Reconciliation of operating profit to net cash flow from
operating activities

                               Half-year        Half-year         Half-year
                              to 30 June       to 30 June    to 31 December
Figures in US$m                     2000             1999              1999

Operating profit                   5,020            3,851             3,558

Change in prepayments
  and accrued income                (157)             140               219
Change in accruals and
  deferred income                   (231)            (169)              418
Interest on finance leases and
  similar hire purchase contracts     13               13                13
Interest on subordinated
  loan capital                       595              380               446
Depreciation and amortisation        683              471               528
Amortisation of discounts
  and premiums                      (106)             (94)              (18)
Provisions for bad
  and doubtful debts                 368            1,082               991
Loans written off net
  of recoveries                     (647)            (422)             (599)
Provisions for liabilities
  and charges                        385              393               372
Provisions utilised                 (260)            (298)             (180)
Amounts written off
  fixed asset investments             14               12                16

Net cash inflow from
  trading activities               5,677            5,359             5,764
Change in items in the course
  of collection from other banks  (2,300)            (856)            1,160
Change in treasury bills and
  other eligible bills             1,833           (2,708)              701
Change in loans and
  advances to banks                2,766           (1,375)           (4,457)
Change in loans and advances
  to customers                    (7,598)             562               564
Change in other securities        (3,694)            (859)           12,152
Change in other assets             2,421            6,172             1,497
Change in deposits by banks       (1,077)           1,432            (6,132)
Change in customer accounts       29,124            4,030             6,239
Change in items in the course
  of transmission to other banks   1,050              884              (325)
Change in debt securities
  in issue                       (13,100)            (191)           (2,133)
Change in other liabilities^       1,734              (35)           (4,583)
Elimination of exchange
  differences^^                    1,060              353            (1,671)

Net cash inflow from
  operating activities            17,896           12,768             8,776


^   The change in other liabilities excludes the creditor of US$9,733 million
    at 31 December 1999 in respect of the acquisitions of the former Republic
    and Safra Republic businesses, as this was a non-operating item. The
    settlement of this creditor was in January 2000 and is recorded under
   'Acquisitions and disposals' in the Consolidated Cash Flow Statement.
^^  Adjustment to bring changes between opening and closing balance sheet
    amounts to average rates. This is not done on a line-by-line basis, as it
    cannot be determined without unreasonable expense.



14.  Financial instruments, contingent liabilities and commitments

                              At 30 June       At 30 June    At 31 December
Figures in US$m                     2000             1999              1999

Contract amounts
Contingent liabilities:
- acceptances and endorsements     4,379            3,663             4,482
- guarantees and assets
  pledged as collateral security  27,340           23,574            27,319
- other                               13                7                39

                                  31,732           27,244            31,840

Commitments:
- documentary credits and
  short-term trade-related
  transactions                     7,104            6,072             6,310
- forward asset purchases and
  forward forward deposits placed    498              481               487
- undrawn note issuing and revolving
  underwriting facilities             90              360                82
- undrawn formal standby facilities,
  credit lines and other
  commitments to lend:
   - over 1 year                  33,288           27,586            33,246
   - 1 year and under            130,656          106,364           128,613
                                 171,636          140,863           168,738

Exchange rate contracts          655,909          636,820           612,403

Interest rate contracts          905,964          913,272           951,479

Equities contracts                35,897           30,147            33,459


The table above gives the nominal principal amounts of third party
off-balance-sheet transactions.

For contingent liabilities and commitments, the contract amount
represents the amount at risk should the contract be fully drawn
upon and the client default. The total of the contract amounts is
not representative of future liquidity requirements.

For exchange rate, interest rate and equities contracts, the
notional or contractual amounts of these instruments indicate the
nominal value of transactions outstanding at the balance sheet
date; they do not represent amounts at risk.



15.  Off-balance-sheet risk-weighted and replacement cost amounts

                              At 30 June       At 30 June    At 31 December
Figures in US$m                     2000             1999              1999

Risk-weighted amounts
Contingent liabilities            23,304           19,814            23,134
Commitments                       17,394           14,440            17,437

Replacement cost amounts
Exchange rate contracts            5,720            5,893            6,764
Interest rate contracts            3,290            4,743            4,171
Equities contracts                 2,088            2,177            2,685
Benefit of netting
  reflected in the above amounts  (4,349)          (5,478)          (5,046)

Risk-weighted amounts are assessed in accordance with the
Financial Services Authority's guidelines which implement the
Basel agreement on capital adequacy and depend on the status of
the counterparty and the maturity characteristics.

Replacement cost of contracts represents the mark-to-market assets
on all third party contracts with a positive value, i.e. an asset
to the HSBC Group. Replacement cost is, therefore, a close
approximation of the credit risk for these contracts as at the
balance sheet date. The actual credit risk is measured internally
and is the sum of the positive mark-to-market value and an
estimate for the future fluctuation risk, using a future risk
factor.



16.  Market risk

Market risk is the risk that foreign exchange rates, interest
rates, or equities and commodity prices will move and result in
profits or losses to the HSBC Group. Market risk arises on
financial instruments which are valued at current market prices
(mark-to-market basis) and those valued at cost plus any accrued
interest (accruals basis).

The Group makes markets in exchange rate, interest rate, and
equities derivative instruments, as well as in debt, equities and
other securities. Trading risks arise either from customer-related
business or from position taking.

The Group manages market risk through risk limits approved by the
Group Executive Committee. Group Market Risk, an independent unit
within HSBC Holdings plc, develops risk management policies and
measurement techniques, and reviews limit utilisation on a daily
basis.

Risk limits are determined for each location and, within location,
for each portfolio. Limits are set by product and risk type with
market liquidity being a principal factor in determining the
level of limits set. Only those offices with sufficient derivative
product expertise and appropriate control systems are authorised
to trade derivative products. Limits are set using a combination
of risk measurement techniques, including position limits,
sensitivity limits, as well as value at risk (VAR) limits at a
portfolio level. Similarly, options risks are controlled through
full revaluation limits in conjunction with limits on the
underlying variables that determine each option's value.

VAR is a technique which estimates the potential losses that could
occur on risk positions taken due to movements in market rates and
prices over a specified time horizon and to a given level of
confidence.

The VAR of the former Republic operations and, as at 31 December
1999, that of the former Safra Republic operations,  has been
calculated using a historical simulation approach, based on the
previous two years' data, using a 99 per cent confidence interval
over a 10-day holding period; this method differs from that of the
rest of the HSBC Group and therefore this VAR is shown separately.

For the rest of the Group, VAR is predominantly calculated on a
variance/covariance basis, uses historical movements in market
rates and prices, a 99 per cent confidence level, a 10-day holding
period and takes account of correlations between different markets
and rates and is calculated daily. The movement in market prices
is calculated by reference to market data from the last two years.
Aggregation of VAR from different risk types is based upon the
assumption of independence between risk types.

During the first half of 2000, the method of computing VAR for the
former Safra Republic operations was changed such that it is now
incorporated with that of the rest of the Group.

The table below gives the maximum, minimum and average VAR for the
Group (including the former Safra Republic operations) as
explained above, but excludes the former Republic operations, as
their VAR reporting is on a different basis from that of the rest
of the Group.

VAR has inherent weaknesses. It is based on statistical models
which rely on underlying assumptions and, by its nature, cannot
cover every eventuality.

The Group recognises these limitations by augmenting the VAR
limits with other position and sensitivity limit structures, as
well as with stress testing, both on individual portfolios and on
a consolidated basis. The Group's stress testing regime provides
senior management with an assessment of the impact of extreme
events on the market risk exposures of the Group.

Trading VAR for the Group, excluding the former Republic
operations, at 30 June was US$56.5 million (31 December 1999:
US$46.1 million). The trading book VAR for the former Republic
operations at 30 June was US$15.8 million (31 December 1999:
US$14.5 million).

Trading VAR for the Group, excluding the former Republic
operations, was:

                                  Minimum     Maximum     Average
                        At 30  during the  during the     for the     At 31
                         June  first half  first half  first half  December
Figures in US$m          2000        2000        2000        2000      1999

Total trading activities 56.5        47.1        73.4        58.2      46.1
Foreign exchange
  trading positions      25.5         8.9        25.5        16.0      12.8
Interest rate
  trading positions      37.6        33.7        66.4        49.7      39.4
Equities 
  trading positions      25.0        19.5        25.0        21.5      16.2

Structural interest rate risk arises from the differing repricing
characteristics of commercial banking assets and liabilities,
including non-interest bearing liabilities such as shareholders'
funds and some current accounts. Each operating entity assesses
the structural interest rate risks which arise in its business and
either transfers such risks to its local treasury unit for
management or transfers the risks to separate books managed by the
local asset and liability management committee ('ALCO'). Local
ALCOs regularly monitor all such interest rate risk positions,
subject to interest rate risk limits agreed with HSBC Holdings
plc. In the course of managing interest rate risk, quantitative
techniques and simulation models are used where appropriate to
identify and assess the potential net interest income and market
value effects of these interest rate positions in different
interest rate scenarios. The primary objective of such interest
rate risk management is to limit potential adverse effects on net
interest income.

HSBC has assessed its overall exposure to changes in interest
rates by calculating the approximate changes in net interest
income of HSBC's major businesses for changes in interest rates.
An immediate hypothetical 100 basis points parallel rise or fall
in all yield curves worldwide on 1 July 2000 would decrease
planned net interest income for the 12 months to 30 June 2001 by
US$104 million or increase it by US$51 million, respectively,
assuming no management action in response to these interest rate
movements.

Rather than assuming that all interest rates move together, HSBC's
interest rate exposures can be grouped in blocs whose interest
rates are considered more likely to move together. The sensitivity
of net interest income for July 2000 to June 2001 can then be
described as follows:

                                                   Latin
                    US dollar  Sterling  Asian  American  Euro  Total  Total
Figures in US$m          bloc      bloc   bloc      bloc  bloc 2000/1   2000^

Change in
July 2000/June 2001
projected net
interest income
+100 basis points shift in
yield curves               46       (79)   (64)        9   (16)  (104)  (116)
-100 basis points shift in
yield curves              (61)       41     64        (9)   16     51     82


^   2000 data is for the sensitivity of net interest income for the 12 months
    to 31 December 2000 to changes in interest rates at 1 January 2000.



The projections assume that rates of all maturities move by the
same amount and, therefore, do not reflect the potential impact on
net interest income of some rates changing while others remain
unchanged. The projections also make other simplifying
assumptions, such as no management action in response to a change
in interest rates.

The average daily revenue earned from market risk-related treasury
activities in the first half of 2000, including accrual book net
interest income and funding related to dealing positions, was
US$10.7 million (first half 1999: US$9.5 million; second half
1999: US$6.9 million). The standard deviation of these daily
revenues was US$4.5 million. An analysis of the frequency
distribution of daily revenues shows that there were no days with
negative revenues during the first half of 2000. The most frequent
result was a daily revenue of between US$12 million and US$13
million, with 17 occurrences. The highest daily revenue was
US$23.4 million.



17.  Litigation

As described in Note 42 to the financial statements contained in
the Group's 1999 Annual Report (the 1999 Report), the Group and
certain of its subsidiaries are defendants in a number of legal
actions arising out of the Princeton Note Matter (as defined in
the 1999 Report). Regulatory and law enforcement agencies,
including the US Attorney for the Southern District of New York,
the Securities and Exchange Commission and the Commodity Futures
Trading Commission, are continuing to investigate the Princeton
Note Matter, including the activities of Republic New York
Securities Corporation (RNYSC) and Republic New York Corporation
(Republic) with respect to the Princeton Note Matter. In addition,
in April, May and June 2000, four additional civil actions arising
from the Princeton Note Matter were commenced in the United States
District Court for the Southern District of New York against
RNYSC, HSBC USA Inc (as successor to Republic) and HSBC Bank USA
(as successor to Republic National Bank of New York) (together the
Republic Parties). Those actions, entitled Nichimen Europe, PLC v
Republic New York Securities Corporation, et al, Kofuku Bank Ltd
and Namihaya Bank Ltd. v Republic New York Securities Corporation,
et al, Kita-Hyogo Shinyo-Kumiai v Republic New York Securities
Corporation, et al, and Ozawa Denki Koji Co., et al, v Republic
New York Securities Corporation, et al, allege unpaid notes of
approximately US$15 million, US$39.5 million, US$21.4 million and
US$29.6 million on behalf of 12 separate entities respectively,
and assert common law claims, claims under the federal securities
laws, the Commodities Exchange Act and the Racketeer Influenced
and Corrupt Organizations Act (RICO). These actions seek
compensatory and punitive damages and treble damages under the
RICO statute. Proceedings in all 15 civil actions arising from the
Princeton Note Matter have been temporarily stayed by the court
with the consent of all parties at the request of the US Attorney
for the Southern District of New York. It is not possible to
assess the outcome of these proceedings at present. The Republic
Parties intend to defend vigorously against these claims.

The Group, through a number of its subsidiary undertakings, is
named in and is defending other legal actions in various
jurisdictions arising from its normal business. No material
adverse impact on the financial position of the Group is expected
to arise from these proceedings.



18.  Corporate governance

The Group is committed to high standards of corporate governance.
The Company has complied throughout the six months to 30 June 2000
with the best practice provisions of the Combined Code on
corporate governance introduced by the London Stock Exchange in
June 1998 and with the provisions of Appendix 14 to the Rules
Governing the Listing of Securities on The Stock Exchange of Hong
Kong.



19.  Differences between UK GAAP and US GAAP *

The consolidated financial statements of HSBC are prepared in
accordance with UK GAAP which differs in certain significant
respects from US GAAP. A summary of the significant differences
applicable to HSBC can be found in HSBC's Registration Statement
on Form 20-F for the year ended 31 December 1999.

The following tables summarise the significant adjustments to
consolidated net income and shareholders' equity which would
result from the application of US GAAP:

                                      Half-year to             Half-year to
Figures in US$m                       30 June 2000             30 June 1999

Net income
Attributable profit of HSBC (UK GAAP)        3,525                    2,694
Lease financing                                (25)                    (32)
Debt swaps                                      99                       -
Shareholders' interest in long-term
  assurance fund                               (51)                    (55)
Pension costs                                  (60)                   (112)
Stock-based compensation                       (97)                    (36)
Goodwill                                      (145)                   (151)
Internal software costs                         65                      72
Revaluation of property                         30                      22
Purchase accounting adjustments                (50)                      -
Taxation
- US GAAP                                      (74)                     (8)
- on reconciling items                          28                      35

                                               (46)                     27
Minority interest in reconciling items          (1)                      -
Estimated net income (US GAAP)               3,244                   2,429

Per share amounts                              US$                     US$
Amounts on a US GAAP basis
Basic earnings per ordinary share             0.38                    0.30
Diluted earnings per ordinary share           0.38                    0.29
Cash earnings per ordinary share              0.42                    0.32


Figures in US$m                    At 30 June 2000     At 31 December 1999

Shareholders' equity
Shareholders' funds (UK GAAP)               35,319                  33,408
Lease financing                               (242)                   (233)
Debt swaps                                      (6)                   (108)
Shareholders' interest in long-term
  assurance fund                              (579)                   (563)
Pension costs                               (1,079)                 (1,093)
Goodwill                                     2,886                   3,173
Internal software costs                        194                     137
Revaluation of property                     (2,700)                 (2,752)
Purchase accounting adjustments                 80                     130
Fair value adjustment for securities
  available for sale                           505                     736
Dividend payable                             1,280                   1,754
Taxation
- US GAAP                                      630                     714
- on reconciling items                         425                     395

                                             1,055                   1,109
Minority interest in reconciling items         279                     232


Estimated shareholders' equity (US GAAP)    36,992                  35,930



Total assets
Total assets at 30 June 2000, incorporating adjustments arising
from the application of US GAAP, would be US$591,860 million (31
December 1999: US$582,706 million).


* Generally accepted accounting principles.



20.  Foreign currency amounts

The sterling and Hong Kong dollar equivalent figures in the
consolidated profit and loss account and balance sheet are for
information only. These are translated at the average rate for the
period for the profit and loss account and the closing rate for
the balance sheet as follows:


Period-end                  30 June 2000     30 June 1999  31 December 1999


Closing: HK$/US$                   7.795            7.759             7.773
         £/US$                     0.660            0.635             0.619
Average: HK$/US$                   7.786            7.751             7.767^
         £/US$                     0.637            0.617             0.619^


^   Average for the second half of 1999.



Review Report of the Auditors, KMPG Audit plc, to HSBC Holdings plc


Introduction
We have been instructed by the Group to review the financial
information set out on pages 5 to 19 and we have read the other
information contained in the Interim Report and considered whether
it contains any apparent misstatements or material inconsistencies
with the financial information.

Directors' responsibilities
The Interim Report, including the financial information contained
therein, is the responsibility of, and has been approved by, the
Directors. The Listing Rules of the Financial Services Authority
require that the accounting policies and presentation applied to
the interim figures should be consistent with those applied in
preparing annual accounts except where they are to be changed in
the next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.

Review work performed
We conducted our review in accordance with the guidance contained
in Bulletin 1999/4: Review of interim financial information issued
by the Auditing Practices Board. A review consists principally of
making enquiries of management and applying analytical procedures
to the financial information and underlying financial data and
based thereon, assessing whether the accounting principles and
presentation have been consistently applied unless otherwise
disclosed. A review is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we
do not express an audit opinion on the financial information.

Review conclusion
On the basis of our review, we are not aware of any material
modifications that should be made to the financial information as
presented for the six months ended 30 June 2000.

KPMG Audit Plc                                        31 July 2000
Chartered Accountants
London



Additional Information

1.  Capital resources

                              At 30 June       At 30 June    At 31 December
                                    2000             1999              1999
                                       %                %                 %

Capital ratios
Total capital ratio                 14.1             15.3             13.2
Tier 1 capital ratio                 9.6             11.4              8.5
- estimated on full
    consolidation of CCF             9.1                -                -

                                    US$m             US$m             US$m

Composition of capital
Tier 1 capital                    32,649          33,594            28,533
Total qualifying
  tier 2 capital                  18,602          13,798            18,433
Deductions                        (3,316)         (2,402)           (2,696)

Total capital                     47,935          44,990            44,270

Total risk-weighted assets       339,444        294,016            336,126



The above figures were computed in accordance with the European
Union Consolidated Supervision Directive.



2.  Economic profit

In 1999, HSBC enhanced its internal performance measures by
adopting economic profit, which takes into account the cost of the
capital invested in the Group by its shareholders. HSBC prices
that cost of capital internally and the difference between that
cost and post-tax profit is the amount of economic profit
generated. Economic profit is used by management to decide where
to allocate resources so that they will be most productive. HSBC
internally emphasises the trend in economic profit within business
units rather than the absolute amounts in order to concentrate
focus on external factors rather than measurement bases. As a
result of this, HSBC has consistently used a benchmark cost of
capital of 12.5 per cent. Given the recent changes in composition
of the Group and evidence of the improving economic conditions in
Asia, we believe that HSBC's true cost of capital is now below
12.5 per cent. The figure of 12.5 per cent is used below for
consistency and to help comparability; it is possible that this
figure will be revised later this year.

Economic profit increased by US$715 million, or 94.5 per cent,
compared with the first half of 1999, and US$933 million, or 173.1
per cent, compared with the second half of 1999. Measurement of
economic profit involves a number of assumptions and, therefore,
management believe that the trend over time is more relevant than
the absolute economic profit reported for a single period.

                      Half-year to      Half-year to       Half-year to
                           30 June           30 June        31 December
Figures in US$m               2000     %        1999     %         1999     %

Average invested capital    40,885            35,533             38,568

Annualised return
  on capital^                4,013  19.7       2,960  16.8        2,969  15.3
Benchmark cost
  of capital                (2,541)(12.5)     (2,203)(12.5)      (2,430)(12.5)

Economic profit              1,472   7.2         757   4.3          539   2.8


^   Return on capital represents profit after tax adjusted for non-equity
    minority interests, goodwill amortisation and other non-cash items.
    Percentage figures are annualised.



3.  Directors' interests

According to the registers of Directors' interests maintained by
the Company pursuant to section 325 of the Companies Act 1985 and
section 29 of the Securities (Disclosure of Interests) Ordinance,
the Directors of the Company at 30 June 2000 had the following
interests, all beneficial unless otherwise stated, in the shares
and loan capital of the Company:

                At 1 January                  At 30 June 2000
                        2000  Personal   Family  Corporate   Other      Total

Ordinary shares of US$0.50
Sir John Bond^        58,317    56,390    3,010          -       -     59,400
R K F Ch'ien          22,456    22,871        -          -       -     22,871
D E Connolly          50,632    51,570        -          -       -     51,570
W R P Dalton^          3,798     3,868        -          -       -      3,868
Baroness Dunn        124,684   102,550        -          -  24,000^^^ 126,550
D G Eldon^             1,749     2,980      800          -       -      3,780
D J Flint^             5,336    10,437        -          -       -     10,437
W K L Fung           287,502   328,000        -          -       -    328,000
S K Green^            13,030         -   13,272          -       -     13,272
Lord Marshall          6,780     6,906        -          -       -      6,906
C Miller Smith           452       452        -          -       -        452
Sir Brian Moffat       5,289         -    5,289          -       -      5,289
C E Reichardt         30,000    30,000        -          -       -     30,000
H Sohmen           2,519,311         -  368,711  2,317,688^^     -  2,686,399
Sir Adrian Swire     425,000         -   20,000          - 334,228^^^ 354,228
Sir Peter Walters     39,015    39,015        -          -       -     39,015
K R Whitson^           5,598     5,701        -          -       -      5,701

11.69 per cent subordinated bonds 2002 of £1
Sir John Bond        500,000   500,000        -          -       -    500,000
A W Jebson^          100,000   100,000        -          -       -    100,000
Lord Marshall            975       975        -          -       -        975
Sir Peter Walters      6,500     6,500        -          -       -      6,500


^   Details of additional interests in ordinary shares of US$0.50 each under
    the Share Option Plans and Restricted Share Plan are set out below.
^^  Interests held by private investment companies.
^^^ Non-beneficial.



Share options
At 30 June 2000, the undernamed Directors held options to acquire
the number of ordinary shares of US$0.50 each set against their
respective names. The options were awarded for nil consideration
at exercise prices equivalent to the market value at the date of
award, except that options awarded under the Savings-Related Share
Option Plan are exercisable at a 15 per cent discount to the
market value at the date of award. There are no remaining
performance criteria conditional upon which the outstanding
options are exercisable. The market value of the ordinary shares
at 30 June 2000 was £7.555. The highest and lowest market values
during the period were £8.225 and £6.815. Market value is the mid-
market price quoted on the London Stock Exchange on the relevant
date.

               Options   Options   Options
                  held   Awarded   held at  Exercise           Exerc-  Exerc-
                  1Jan    during     30Jun     price  Date of  isable  isable
                  2000    period      2000      in £    award    from^  until

Sir John Bond   60,543         -    60,543    2.4062  12Oct93 12Oct96  12Oct03
                60,543         -    60,543    2.8376   8Mar94  8Mar97   8Mar04
                75,000         -    75,000    2.1727   7Mar95  7Mar98   7Mar05
                 9,549^^       -     9,549    1.8060  10Apr95  1Aug00  31Jan01
                75,000^^^      -    75,000    3.3334   1Apr96  1Apr99   1Apr06
                           2,798^^   2,798    6.0299  10Apr00  1Aug05  31Jan06

W R P Dalton    22,704         -    22,704    2.4062  12Oct93 12Oct96  12Oct03
                30,273         -    30,273    2.8376   8Mar94  8Mar97   8Mar04
                36,000         -    36,000    2.1727   7Mar95  7Mar98   7Mar05
                 8,625^^       -     8,625    1.8060  10Apr95  1Aug00  31Jan01
                36,000^^^      -    36,000    3.3334   1Apr96  1Apr99   1Apr06
                           2,798^^   2,798    6.0299  10Apr00  1Aug05  31Jan06

D G Eldon       36,000         -    36,000    2.1727   7Mar95  7Mar98   7Mar05
                40,500^^^      -    40,500    3.3334   1Apr96  1Apr99   1Apr06

D J Flint       36,000^^^      -    36,000    3.3334   1Apr96  1Apr99   1Apr06
                 3,813^^       -     3,813    4.5206   9Apr97  1Aug02  31Jan03

S K Green       24,216         -    24,216    2.4062  12Oct93 12Oct96  12Oct03
                36,324         -    36,324    2.8376   8Mar94  8Mar97   8Mar04
                45,000         -    45,000    2.1727   7Mar95  7Mar98   7Mar05
                45,000^^^      -    45,000    3.3334   1Apr96  1Apr99   1Apr06
                 5,637^^       -     5,637    3.0590   3Apr96  1Aug01  31Jan02

A W Jebson      15,000         -    15,000    2.1727   7Mar95  7Mar98   7Mar05
                22,500^^^      -    22,500    3.3334   1Apr96  1Apr99   1Apr06

K R Whitson     37,839         -    37,839    2.8376   8Mar94  8Mar97   8Mar04
                60,000         -    60,000    2.1727   7Mar95  7Mar98   7Mar05
                 9,549^^       -     9,549    1.8060  10Apr95  1Aug00  31Jan01
                60,000^^^      -    60,000    3.3334   1Apr96  1Apr99   1Apr06
                           2,798^^   2,798    6.0299  10Apr00  1Aug05  31Jan06

No options were exercised by Directors during the period.


^   May be advanced to an earlier date in certain circumstances, e.g.
    retirement.
^^  Options awarded under the Savings-Related Share Option Plan.
^^^ The exercise of these options was conditional upon the growth in earnings
    per share over a three-year period being equal to or greater than a
    composite rate of inflation (comprising 50 per cent of the Hong Kong
    Composite Consumer Price Index, 35 per cent of the UK Retail Price Index
    and 15 per cent of the USA All Urban Consumer Price Index) plus 2 per cent
    per annum. This condition has been satisfied.



Restricted Share Plan (ordinary shares of US$0.50 each)

                                     Monetary
                        Awards       value of  Awards
                Awards    made    awards made  vested     Awards       Year in
               Held at  during  during period  during    held at  which awards
          1 January 00  period           £000  period  30 June00^     may vest

Sir John Bond   25,179       -              -       -     25,646  2001 or 2002
                26,614       -              -       -     27,107  2002 or 2003
                51,688       -              -       -     52,647          2004
                        76,375            550       -     77,792          2005
W R P Dalton    31,938       -              -       -     32,530^^        2001
                15,747       -              -       -     16,040  2001 or 2002
                17,745       -              -       -     18,074  2002 or 2003
                30,152       -              -       -     30,711          2004
                        34,716            250       -     35,360          2005
D G Eldon       18,897       -              -       -     19,247  2001 or 2002
                21,290       -              -       -     21,685  2002 or 2003
                30,152       -              -       -     30,711          2004
                        34,716            250       -     35,360          2005
                         6,733             47       -      6,733^^^       2003
D J Flint       15,747       -              -       -     16,040  2001 or 2002
                17,745       -              -       -     18,074  2002 or 2003
                30,152       -              -       -     30,711          2004
                        31,244            225       -     31,824          2005
S K Green       18,897       -              -       -     19,247  2001 or 2002
                21,290       -              -       -     21,685  2002 or 2003
                30,152       -              -       -     30,711          2004
                        34,716            250       -     35,360          2005
A W Jebson      10,498       -              -       -     10,693  2001 or 2002
                 8,873       -              -       -      9,037  2002 or 2003
                25,844       -              -       -     26,324          2004
                        27,772            200       -     28,288          2005
K R Whitson     18,897       -              -       -     19,247  2001 or 2002
                21,290       -              -       -     21,685  2002 or 2003
                43,074       -              -       -     43,872          2004
                        48,602            350       -     49,504          2005

Unless otherwise indicated, vesting of these shares is subject to the
performance tests described in the 'Report of the Directors' in the 1996,
1997, 1998 and 1999 Annual Report and Accounts being satisfied.


^   Includes additional shares arising from scrip dividends.
^^  Award not subject to performance conditions.
^^^ 50 per cent of D G Eldon's 1999 discretionary bonus was awarded in
    Restricted Shares with a three-year restricted period.



Sir John Bond has a personal interest in £290,000 of HSBC Capital
Funding (Sterling 1) L.P. 8.208 per cent Non-cumulative Step-up
Perpetual Preferred Securities, which he acquired during the
period.

D G Eldon has a personal interest in 300 Hang Seng Bank Limited
ordinary shares of HK$5.00 each, which he acquired during the
period.

S K Green has a personal interest in EUR75,000 of HSBC Holdings plc
5 1/2 per cent Subordinated Notes 2009 and £100,000 of HSBC Bank
plc 9 per cent Subordinated Notes 2005, which he held throughout
the period.

H Sohmen has a corporate interest in £1,200,000 of HSBC Bank plc 9
per cent Subordinated Notes 2005 and in US$3,000,000 of HSBC Bank
plc Senior Subordinated Floating Rate Notes 2009, which he held
throughout the period. Dr Sohmen also has a corporate interest in
US$6,000,000 of HSBC Capital Funding (Dollar 1) L.P. 9.547 per
cent Non-cumulative Step-up Perpetual Preferred Securities, Series
1, which he acquired during the period.

Save as stated above, none of the Directors had an interest in any
shares or debentures of any Group company at the beginning or at
the end of the period and none of the Directors, or members of
their immediate families, was awarded or exercised any right to
subscribe for any shares or debentures during the period. No
options held by Directors lapsed during the period.



4.  Substantial interests in share capital

No substantial interest, being 10 per cent or more, in the equity
share capital is recorded in the register maintained under section
16(1) of the Securities (Disclosure of Interests) Ordinance.



5.  Dealings in HSBC Holdings shares

Save for dealings by HSBC Investment Bank plc, trading as an
intermediary in the Company's shares in London, neither the
Company nor any subsidiary undertaking has bought or sold any
shares of the Company during the six months ended 30 June 2000.



6.  Forward-looking statements

This Interim Report contains certain forward-looking statements
with respect to the financial condition, results of operations and
business of the Group. These forward-looking statements represent
the Group's expectations or beliefs concerning future events and
involve known and unknown risks and uncertainty that could cause
actual results, performance or events to differ materially from
those expressed or implied in such statements. For example,
certain of the market risk disclosures, some of which are only
estimates and therefore could be materially different from actual
results, are dependent on key model characteristics and
assumptions and are subject to various limitations. Certain
statements, such as those that include the words 'potential',
'value at risk', 'estimated', and similar expressions or
variations on such expressions may be considered 'forward-looking
statements'.



7.  Registers of shareholders

The Overseas Branch Register of shareholders in Hong Kong will be
closed from Wednesday 16 August to Friday 18 August 2000 (both
dates inclusive). Any person who has acquired shares registered on
the Hong Kong Branch Register but who has not lodged the share
transfer with the Branch Registrar should do so before 4.00 p.m.
on Tuesday 15 August 2000 in order to receive the dividend.

Any person who has acquired shares registered on the Principal
Register in the United Kingdom but who has not lodged the share
transfer with the Principal Registrar should do so before 4.00
p.m. on Friday 18 August 2000 in order to receive the dividend.
Transfers between the Principal Register and the Branch Register
may not be made while the Branch Register is closed.

Similarly, transfers of American Depositary Shares must be lodged
with the depositary, HSBC Bank USA, by noon on Friday 18 August
2000 in order to receive the dividend.



8.  Statutory accounts

The information in this Interim Report is unaudited and does not
constitute statutory accounts within the meaning of section 240 of
the Companies Act 1985 (the Act). The statutory accounts for the
year ended 31 December 1999 have been delivered to the Registrar
of Companies in England and Wales in accordance with section 242
of the Act. The auditor has reported on those accounts; its report
was unqualified and did not contain a statement under section
237(2) or (3) of the Act.



9.  Copies of the Interim Report

Further copies of this Interim Report may be obtained from Group
Corporate Affairs, HSBC Holdings plc, 10 Lower Thames Street,
London EC3R 6AE, United Kingdom; or The Hongkong and Shanghai
Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; or
HSBC Bank USA, 452 Fifth Avenue, New York, New York 10018, USA; or
from the HSBC website, www.hsbc.com. A Chinese translation of the
report may be obtained on request from Central Registration Hong
Kong Limited, Rooms 1901-5, Hopewell Centre, 183 Queen's Road
East, Hong Kong.

A French translation of the report may be obtained by writing to
CCF (Credit Commercial de France), Direction de la Communication,
103 avenue des Champs Elysees, 75419 Paris Cedex 08, France.