3/4: Hang Seng FY03 PT 2

HSBC Holdings PLC
01 March 2004

Segmental analysis

Segmental information is presented in respect of business and geographical
segments. Business segment information, which is more relevant to Hang Seng in
making operating and financial decisions, is chosen as the primary reporting
format.

For the purpose of segmental analysis, the allocation of revenue reflects the
benefits of capital and other funding resources allocated to the business or
geographical segments by way of internal capital allocation and funds transfer
pricing mechanisms. Cost allocation is based on the direct cost incurred by the
respective segments and apportionment of management overheads. Rental charges at
the market rate for usage of premises are reflected as inter-segment income for
the 'Other' segment and inter-segment expenses for the respective business
segments.

(a) By business segment

Hang Seng comprises five business segments. Personal Financial Services provides
banking (including deposits, credit cards, mortgages and other retail lending)
and wealth management services (including insurance and investment) to personal
customers. Commercial Banking manages middle market and smaller corporate
relationships and provides trade-related financial services. Corporate and
Institutional Banking handles relationships with large corporate and
institutional customers. Treasury engages in interbank and capital market
activities and proprietary trading. Treasury also manages the funding and
liquidity positions of the bank and other market risk positions arising from
banking activities. Other mainly represents management of shareholders' funds
and investments in premises, investment properties and long-term equities.

Personal Financial Services reported a profit before tax of HK$5,630 million for
2003, a growth of 1.4 per cent over 2002, and contributed 50.6 per cent of the
bank's pre-tax profit for the year (49.4 per cent for 2002). Net interest income
recorded a decline of 6.2 per cent, affected by the contraction in Government
Home Ownership Scheme mortgages, further decline in the mortgage portfolio yield
and narrowing of spread on time deposits. Other operating income rose by 30.8
per cent. Wealth management services remained the main growth driver with
investment services up by 29.8 per cent. Insurance income rose by 109.4 per cent
including the full amount of underwriting profit of Hang Seng Life Limited on
consolidation. Income from securities broking and related services, and private
banking, also showed encouraging growth. Total funds under management by Hang
Seng's asset management and private banking business units grew by HK$17.3
billion, or 42.5 per cent, to HK$57.9 billion at 31 December 2003.

Commercial Banking's profit before tax for 2003 was HK$1,177 million, 6.0 per
cent higher than 2002, and made a contribution of 10.6 per cent (9.9 per cent
for 2002) to the bank total. Net interest income rose by 4.0 per cent, resulting
from a 19.1 per cent growth in customer advances. Other operating income
increased by 5.6 per cent, mainly from general insurance income from commercial
banking customers and trade services.

Corporate and Institutional Banking suffered from a decline of 18.1 per cent in
profit before tax to HK$770 million and contributed 6.9 per cent (8.3 per cent
for 2002) to the bank total. The operating result was affected by the
compression in corporate lending spreads and a reduction in credit facilities
income.

Treasury recorded a growth of 14.6 per cent in pre-tax profit of HK$2,278
million in 2003, which represented 20.4 per cent (17.7 per cent for 2002) of the
bank total. Net interest income rose by 8.3 per cent as more funds were
re-deployed from interbank placings to capital market investments for yield
enhancement. Other operating income increased by 45.4 per cent, mainly in
foreign exchange income.

Other showed a decline of 22.4 per cent in profit before tax to HK$1,282 million
in 2003 and contributed 11.5 per cent (14.7 per cent for 2002) of the bank
total. This decline was mainly attributable to the substantial reduction in free
funds contribution following the further decline in market interest rates.

                      Personal                  Corporate &                            Inter-
                     Financial   Commercial   Institutional                           segment
Figures in HK$m       Services      Banking         Banking   Treasury    Other   Elimination     Total

Year ended 31Dec03

Income and expenses

Net interest income      6,175        1,064             543      1,874      523             -    10,179
Other operating income   3,167          930             218        509      374             -     5,198
Inter-segment income         -            -               -          -      345          (345)        -
Total operating income   9,342        1,994             761      2,383    1,242          (345)   15,377
Operating expenses^     (2,518)        (799)           (111)      (148)    (326)            -    (3,902)
Inter-segment
  expenses                (276)         (57)             (7)        (5)       -           345         -
Operating profit before
  provisions             6,548        1,138             643      2,230      916             -    11,475
Provisions for bad 
  and doubtful debts      (930)          11             127          -        -             -      (792)
Operating profit         5,618        1,149             770      2,230      916             -    10,683
Profit on tangible
  fixed assets and
  long-term investments     12           28               -         48      373             -       461
Net deficit on
  property revaluation       -            -               -          -      (37)            -       (37)
Share of profits of
  associated companies       -            -               -          -       30             -        30
Profit on ordinary
  activities before
  tax                    5,630        1,177             770      2,278    1,282             -    11,137

Profit on ordinary
  activities before 
  tax as a percentage
  of total                50.6%        10.6%            6.9%      20.4%    11.5%            -     100.0%

Operating profit
  excluding
  inter-segment
  transactions           5,894        1,206             777      2,235      571             -    10,683

^Including depreciation   (122)         (20)             (2)        (2)    (183)            -      (329)

At 31Dec03

Total assets           137,988       31,749          68,393    242,014   22,815             -   502,959
Total liabilities      344,281       72,625          19,760      7,225   18,783             -   462,674
Investments in
  associated companies       -            -               -          -      549             -       549
Capital expenditure
  incurred during
  the year                  77           19               4          1       41             -       142

                      Personal                  Corporate &                            Inter-
                     Financial   Commercial   Institutional                           segment
Figures in HK$m       Services      Banking         Banking   Treasury    Other   Elimination     Total

Year ended 31Dec02

Income and expenses

Net interest income      6,583        1,023             640      1,731      828             -    10,805
Other operating income   2,422          881             253        350      376             -     4,282
Inter-segment income         -            -               -          -      408          (408)        -
Total operating income   9,005        1,904             893      2,081    1,612          (408)   15,087
Operating expenses^     (2,450)        (803)           (111)      (132)    (336)            -    (3,832)
Inter-segment expenses    (327)         (67)             (8)        (6)       -           408         -
Operating profit before
  provisions             6,228        1,034             774      1,943    1,276             -    11,255
Provisions for bad and
  doubtful debts          (785)          48             166          -        -             -      (571)
Operating profit         5,443        1,082             940      1,943    1,276             -    10,684
Profit on tangible
  fixed assets and
  long-term investments     21           28               -         45      367             -       461
Net deficit on property
  revaluation                -            -               -          -      (36)            -       (36)
Share of profits of
  associated companies      88            -               -          -       45             -       133
Profit on ordinary
  activities before tax  5,552        1,110             940      1,988    1,652             -    11,242

Profit on ordinary
  activities before tax 
  as a percentage of
  total                   49.4%         9.9%            8.3%      17.7%    14.7%            -     100.0%

Operating profit
  excluding
  inter-segment
  transactions           5,770        1,149             948      1,949      868             -    10,684

^Including depreciation   (125)         (22)             (3)        (2)    (200)            -      (352)

At 31Dec02

Total assets           137,762       25,937          64,783    222,879   23,293             -   474,654
Total liabilities      317,076       70,538          11,746      8,360   23,405             -   431,125
Investments in
  associated companies       -            -               -          -      672             -       672
Capital expenditure
  incurred during
  the year                 120           21               4          2       48             -       195

(b) By geographical region

The geographical regions in this analysis are classified by the location of the
principal operations of the subsidiary companies or, in the case of the bank
itself, by the location of the branches responsible for reporting the results or
advancing the funds.

Figures in HK$m              Hong Kong       Americas       Other       Total

Year ended 31Dec03

Income and expenses

Total operating income          13,981          1,322          74      15,377
Profit on ordinary
 activities before tax           9,781          1,295          61      11,137

At 31Dec03

Total assets                   427,539         65,204      10,216     502,959
Total liabilities              449,243          8,376       5,055     462,674
Capital expenditure
  incurred during the year         130              -          12         142
Contingent liabilities and
  commitments                  107,588            122       1,671     109,381

Year ended 31Dec02

Income and expenses

Total operating income           13,293         1,721          73      15,087
Profit on ordinary activities
  before tax                      9,474         1,699          69      11,242

At 31Dec02

Total assets                    394,165        72,359       8,130     474,654
Total liabilities               416,388         9,444       5,293     431,125
Capital expenditure incurred
  during the year                   187             1           7         195
Contingent liabilities and
  commitments                   106,470             -       1,092     107,562

Cash and short-term funds

Figures in HK$m                                At 31Dec03     At 31Dec02

Cash in hand and balances with banks
  and other financial institutions                  4,780          3,518

Money at call and placings with banks
  maturing within one month                        62,566         67,170
Treasury bills                                      4,557          7,096

                                                   71,903         77,784

Remaining maturity of treasury bills:
- within three months                                 174          5,777
- one year or less but over three months            4,383          1,319
                                                    4,557          7,096

Placings with banks maturing after one month

Figures in HK$m                                At 31Dec03     At 31Dec02

Remaining maturity:
- three months or less but over one
  month                                            15,576         27,996
- one year or less but over three months            2,253          2,923
- five years or less but over one year                200              -
                                                   18,029         30,919

Certificates of deposit

Figures in HK$m                                At 31Dec03     At 31Dec02

Remaining maturity:
- three months or less but not repayable
  on demand                                         1,870          1,772
- one year or less but over three months           10,171          7,312
- five years or less but over one year
  year                                             16,642         21,036

                                                   28,683         30,120
Securities held for dealing purposes

Figures in HK$m                                At 31Dec03     At 31Dec02

Debt securities by remaining maturity:
- three months or less but not repayable
  on demand                                            38             97
- one year or less but over three months              191             90
- five years or less but over one
  year                                                840            890
- over five years                                     146            121

                                                    1,215          1,198
Equity shares                                          17              -
                                                    1,232          1,198

Debt securities held for dealing purposes exclude treasury bills and
certificates of deposit which are included under the respective headings in the
balance sheet.

Advances to customers

Figures in HK$m                                At 31Dec03     At 31Dec02

Gross advances to customers                       231,999        227,475
Specific provisions                                (1,432)        (1,805)
General provisions                                 (1,101)        (1,108)
                                                  229,466        224,562

Remaining maturity:
- repayable on demand                              11,488         11,983
- three months or less but not repayable
  on demand                                        20,341         18,128
- one year or less but over three months           22,585         21,243
- five years or less but over one year             89,565         84,466
- over five years                                  81,402         84,273
- overdue for more than one month                   1,375          1,301
- non-performing advances                           5,243          6,081
Gross advances to customers                       231,999        227,475
Provisions for bad and doubtful debts              (2,533)        (2,913)
                                                  229,466        224,562

Included in advances to customers are:
- trade bills                                       2,226          2,180
- provisions for bad and doubtful debts               (17)           (78)
                                                    2,209          2,102

Advances to customers (after deduction of interest in suspense and provisions)
recorded a growth of HK$4,904 million, or 2.2 per cent, to HK$229.5 billion at
31 December 2003.

Provisions against advances to customers

                                                             Suspended
Figures in HK$m                Specific   General    Total    interest

At 1Jan03                         1,805     1,108    2,913         404
Amounts written off              (1,226)        -   (1,226)       (196)
Recoveries of advances
  written off in previous years      54         -       54           -
New provisions charged to
  profit and loss account         1,167         -    1,167           -
Provisions released to profit 
  and loss account                 (369)       (6)    (375)          -
Interest suspended during the
  year                                -         -        -         120
Suspended interest recovered          -         -        -         (35)
Exchange adjustment                   1        (1)       -           -
At 31Dec03                        1,432     1,101    2,533         293

Suspended interest 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 31Dec03           At 31Dec02
                                                %                    %

Specific provisions                          0.62                 0.79
General provisions                           0.48                 0.49
Total provisions                             1.10                 1.28

Total provisions as a percentage of gross advances to customers fell to 1.10 per
cent at 31 December 2003, compared with 1.28 per cent at the end of 2002.
Specific provisions as a percentage of gross advances decreased by 17 basis
points to 0.62 per cent. The reduction mainly reflected the writing-off of
irrecoverable balances against provisions, repayments and releases on
improvement of collateral position and upgrading of doubtful accounts to
performing status. General provisions stood at 0.48 per cent of gross advances
to customers, compared with 0.49 per cent at the end of 2002.

Non-performing advances to customers and provisions

Non-performing advances to customers on which interest has been placed in
suspense or on which interest has ceased to accrue are as follows:

Figures in HK$m                              At 31Dec03    At 31Dec02

Gross non-performing advances on
  which interest:
- has been placed in suspense                     5,182         5,767
- accrual has ceased                                134           429
                                                  5,316         6,196
Suspended interest                                  (73)         (115)
Gross non-performing advances^(page 29)           5,243         6,081
Specific provisions                              (1,432)       (1,805)
Net non-performing advances                       3,811         4,276

Specific provisions as a percentage of
  gross non-performing advances^                   27.3%         29.7%

Gross non-performing advances^ as a
  percentage of gross advances to customers         2.3%          2.7%

^Stated after deduction of interest in suspense.

Non-performing advances to customers are those advances where full repayment of
principal or interest is considered unlikely and are so classified as soon as
such a situation becomes apparent. Non-performing advances may include advances
that are not yet overdue for more than three months but are considered doubtful.
Except in certain limited circumstances, all advances on which principal or
interest is overdue for more than three months are classified as non-performing.
Specific provisions are made after taking into account the value of collateral
held in respect of such advances.

Gross non-performing advances (after deduction of interest in suspense) fell by
HK$838 million, or 13.8 per cent, to HK$5,243 million, compared with the end of
2002. The ratio of gross non-performing advances to gross advances to customers
further improved to 2.3 per cent from 2.7 per cent at the end of 2002.

Overdue advances to customers

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

                                         At 31Dec03            At 31Dec02
                                  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              1,297          0.5        934        0.4
- one year or less but
  over six months                  858          0.4      1,097        0.5
- over one year                  1,152          0.5      2,734        1.2
                                 3,307          1.4      4,765        2.1

Overdue advances to customers
  (as above)                     3,307          1.4      4,765        2.1

Less: overdue advances on which
  interest is still being
  accrued                       (1,108)        (0.5)    (1,131)      (0.5)
Add: advances overdue for 
  periods of three months or
  less, or which are not yet
  overdue, and on which interest
  has been placed in suspense
- included in rescheduled
  advances                       1,536          0.7      1,814        0.8
- other                          1,508          0.7        633        0.3
Gross non-performing advances
  (page 28)                      5,243          2.3      6,081        2.7

^Stated after deduction of interest in suspense.

Advances with a specific repayment date are classified as overdue when the
principal or interest is overdue and remains unpaid at the year-end. Advances
repayable by regular instalments are treated as overdue when an instalment
payment is overdue and remains unpaid at the year-end. Advances repayable on
demand are classified as overdue either when a demand for repayment has been
served on the borrower but repayment has not been made in accordance with the
demand notice, or when the advances have remained continuously outside the
approved limit advised to the borrower for more than the overdue period in
question.

Rescheduled advances to customers

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

                                         At 31Dec03            At 31Dec02
                                  HK$m            %        HK$m         %
Rescheduled advances
  to customers^                  2,608          1.1       1,831       0.8

^Stated after deduction of interest in suspense.

Rescheduled advances are those advances which have been restructured or
renegotiated because of deterioration in the financial position of the borrower
leading to an inability 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 (page 29).

Rescheduled advances to customers increased by HK$777 million, or 42.4 per cent,
to HK$2,608 million at 31 December 2003, representing 1.1 per cent of gross
advances to customers. The increase was due to the debt restructuring of certain
corporate customers.

Repossessed assets

In the recovery of non-performing advances, Hang Seng may take repossession of
the collateral assets through court proceedings or voluntary delivery of
possession by the borrowers. Specific provisions have been made in respect of
such non-performing advances taking into account the net realisable value of the
related collateral which is revalued periodically. Upon repossession of the
collateral assets, the advances are adjusted to the net realisable value of the
repossessed assets, usually resulting in a partial write-off of the advances
against specific provisions. Advances with repossessed collateral assets will
continue to be accounted for as 'Advances to customers' and classified as
non-performing. The aggregate valuation of the repossessed collateral assets
amounted to:

Figures in HK$m                            At 31Dec03       At 31Dec02

Repossessed collateral assets                     506              638

Segmental analysis of advances to customers by geographical area

Advances to customers by geographical area are classified according to the
location of the counterparties after taking into account the transfer of risk.
In general, risk transfer applies when an advance is guaranteed by a party
located in an area which is different from that of the counterparty. At 31
December 2003, over 90 per cent of Hang Seng's advances to customers and the
related non-performing advances and overdue advances were classified under the
area of Hong Kong (unchanged from the position at 31 December 2002).

Gross advances to customers by industry sector

The analysis of gross advances to customers (after deduction of interest in
suspense) by industry sector based on categories and definitions used by the
Hong Kong Monetary Authority is as follows:

Figures in HK$m                                At 31Dec03   At 31Dec02

Gross advances to customers for use in 
  Hong Kong

Industrial, commercial and financial sectors
Property development                               16,828       19,300
Property investment                                34,555       31,507
Financial concerns                                  6,109        2,071
Stockbrokers                                          226          219
Wholesale and retail trade                          4,376        3,941
Manufacturing                                       2,556        2,037
Transport and transport equipment                  10,139        9,238
Other                                              17,727       19,521
                                                   92,516       87,834

Individuals
Advances for the purchase of flats under
  the Government Home Ownership Scheme,
  Private Sector Participation Scheme and
  Tenants Purchase Scheme                          30,431       35,050
Advances for the purchase of other
  residential properties                           79,830       78,518
Credit card advances                                5,430        5,578
Other                                               5,779        6,251
                                                  121,470      125,397
Total gross advances for use in Hong Kong         213,986      213,231
Trade finance                                      11,322        9,751
Gross advances for use outside Hong Kong            6,691        4,493
Gross advances to customers                       231,999      227,475

Lending to the industrial, commercial and financial sectors grew by HK$4,682
million, or 5.3 per cent, since the end of 2002. The increase was mainly in
lending to financial concerns which included the financing vehicles of large
corporate groups and public sector entities engaged in financing activities.
Lending to transport and transport equipment concerns also increased, mainly to
public transport companies. Lending to the property sector was in line with
2002, whilst lending under the 'Other' sector fell, mainly due to the repayment
of certain large corporate loans.

Lending to individuals fell by HK$3,927 million, or 3.1 per cent. This was
affected by the fall of HK$4,619 million, or 13.2 per cent, in advances under
the suspended Government Home Ownership Scheme and other Government subsidised
home purchasing schemes, excluding which lending to individuals rose by HK$692
million, or 0.8 per cent. Residential mortgages increased by HK$1,312 million,
or 1.7 per cent, following the pick-up in property market activities in the
third and fourth quarters.

Trade finance rose by HK$1,571 million, or 16.1 per cent, benefiting from the
improvement in external trade.

Gross advances for use outside Hong Kong grew by HK$2,198 million, or 48.9 per
cent, mainly reflecting the expansion in the loan portfolios of Mainland
branches.

Long-term investments

                                                  Carrying value
Figures in HK$m                              At 31Dec03     At 31Dec02

Held-to-maturity debt securities
Issued by public bodies
- central governments and central banks          12,408         10,664
- other public sector entities                   12,365          9,219
                                                 24,773         19,883
Issued by other bodies
- banks and other financial institutions         68,230         40,011
- corporate entities                             18,747         16,960
                                                 86,977         56,971
                                                111,750         76,854
Equity investments
Issued by corporate entities                      2,131          2,315
                                                113,881         79,169

Held-to-maturity debt securities
- listed in Hong Kong                             3,001          2,340
- listed outside Hong Kong                       24,687         19,551
                                                 27,688         21,891
- unlisted                                       84,062         54,963
                                                111,750         76,854
Equity investments
- listed in Hong Kong                             1,313          1,603
- listed outside Hong Kong                           87             70
                                                  1,400          1,673
- unlisted                                          731            642
                                                  2,131          2,315

                                                113,881         79,169

Held-to-maturity debt securities are stated at cost, adjusted for the
amortisation of premiums and accretion of discounts over the period from the
date of purchase to the date of maturity. Equity investments are stated at fair
value.

Investment in held-to-maturity debt securities rose by HK$34.9 billion, or 45.4
per cent, to HK$111.8 billion, with funds from the growth in customer deposits
and re-deployment of funds from interbank placings to enhance net interest
yield. Over 95 per cent of the held-to-maturity debt securities will mature
within five years. The fair value of the held-to-maturity debt securities
amounted to HK$112.6 billion, showing an unrealised gain of HK$0.9 billion at 31
December 2003.

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

                                                     Fair value
Figures in HK$m                              At 31Dec03     At 31Dec02

Held-to-maturity debt securities
Issued by public bodies
- central governments and central banks          12,578         10,924
- other public sector entities                   12,763          9,645
                                                 25,341         20,569
Issued by other bodies
- banks and other financial institutions         68,375         40,213
- corporate entities                             18,929         17,241
                                                 87,304         57,454
                                                112,645         78,023

Held-to-maturity debt securities
- listed in Hong Kong                             3,074          2,403
- listed outside Hong Kong                       24,790         19,777
                                                 27,864         22,180
- unlisted                                       84,781         55,843
                                                112,645         78,023

Maturity analysis of held-to-maturity debt securities:

                                                   Carrying value
Figures in HK$m                              At 31Dec03     At 31Dec02

Remaining maturity:
- repayable on demand                                78              -
- three months or less but
  not repayable on demand                         6,827         14,875
- one year or less but over three months         17,474          8,911
- five years or less but over one year           82,130         50,807
- over five years                                 5,241          2,261
                                                111,750         76,854
Other assets
                                               At 31Dec03   At 31Dec02
Figures in HK$m                                               restated^

Unrealised gains on off-balance sheet
  interest rate, exchange rate and
  other derivative contracts
  which are marked to market                        1,664          981
Deferred taxation                                      52           73
Items in the course of collection from other
  banks                                             3,244        2,886
Prepayments and accrued income                      2,179        2,143
Long-term assurance assets
  attributable to policy holders                    4,982        2,897
Other accounts                                      3,815        3,340
                                                   15,936       12,320

Remaining maturity:
- three months or less                              8,811        6,929
- one year or less but over three months              770          637
- five years or less but over one year                183          968
- over five years                                   6,135        3,745
                                                   15,899       12,279
- overdue^^
  -- six months or less but over three months           5            5
  -- one year or less but over six months               8            9
  -- over one year                                     24           27
                                                       37           41
                                                   15,936       12,320

^Certain figures for 2002 have been restated to reflect the adoption of Hong
Kong Statement of Standard Accounting Practice 12 (revised) (HKSSAP 12) on
'Income taxes', details of which are set out in Note 1 of the additional
information on page 49.

^^Represented mainly by overdue interest receivable included under 'Prepayments
and accrued income'.

Other assets increased by HK$3,616 million, or 29.4 per cent, to HK$15,936
million, compared with HK$12,320 million at 31 December 2002, reflecting the
increase in long-term assurance assets attributable to policy holders and
unrealised marked-to-market gains on off-balance sheet derivative contracts.

Current, savings and other deposit accounts

Figures in HK$m                              At 31Dec03     At 31Dec02

Customer deposit accounts
- current accounts                               48,568         36,242
- savings accounts                              205,769        154,476
- time and other deposits                       177,634        206,973
Certificates of deposit in issue                  7,927         15,916
Other debt securities in issue                       15             86
                                                439,913        413,693

Customer deposit accounts
Repayable on demand                             281,296        210,351
With agreed maturity dates or periods of
  notice, by remaining maturity:
- three months or less but
  not repayable on demand                       139,123        180,380
- one year or less but over three
  months                                          7,474          6,701
- five years or less but over one year            3,720            259
- over five years                                   358              -
                                                431,971        397,691

Certificates of deposit in issue
Remaining maturity:
- three months or less but
  not repayable on demand                           908          2,887
- one year or less but over three
  months                                          1,132          9,635
- five years or less but over one year            5,685          3,189
- over five years                                   202            205
                                                  7,927         15,916

Other debt securities in issue
Remaining maturity:
- three months or less but
  not repayable on demand                            15             48
- one year or less but over three months              -             38
                                                     15             86
                                                439,913        413,693

Current, savings and other deposit accounts increased by HK$26.2 billion, or 6.3
per cent, to HK$439.9 billion, compared with HK$413.7 billion at 31 December
2002. The growth was mainly in customer deposit accounts which grew by HK$34.3
billion, or 8.6 per cent. During the year, customers continued to shift from
time deposits to savings and current accounts in the prevailing low interest
rate environment.

Certificates of deposit and other debt securities in issue fell by HK$8.1
billion, or 50.4 per cent, to HK$7.9 billion following the maturity of part of
the certificates of deposit portfolio.

Deposits from banks
Figures in HK$m                              At 31Dec03     At 31Dec02

Repayable on demand                                 654            555
With agreed maturity dates or periods of
  notice, by remaining maturity:
- three months or less but
  not repayable on demand                           448            515
- one year or less but over three months            100              2
                                                  1,202          1,072







                      This information is provided by RNS
            The company news service from the London Stock Exchange