4/5: HSBC USA Inc 2002 (1/1)

HSBC Holdings PLC
03 March 2003

                                 HSBC USA INC.
                           2002 RESULTS - HIGHLIGHTS

* Full-year net income in 2002 increased to US$855 million compared to US$353
million in 2001. Net income in 2001 included a US$351 million after tax
provision for the settlement of the Princeton Note Matter ("Princeton") and
US$176 million of goodwill amortisation not included in 2002 earnings, under new
US GAAP accounting rules. When 2001 is adjusted for these items, net income
decreased by 3 per cent to US$855 million in 2002 from US$880 million in 2001,
although net income before taxes increased by 3 per cent year on year.

* Fourth quarter net income in 2002 increased to US$228 million compared to
US$152 million for the same period last year. Fourth quarter net income in 2001
included US$43 million of goodwill amortisation not included in the fourth
quarter of 2002. When 2001 is adjusted for this, net income increased by 17 per
cent to US$228 million in the 2002 fourth quarter from US$195 million in the
same period in 2001, while pre tax income increased 27 per cent to US$369
million from US$291 million.

* Net income as a percentage of average common equity for the full-year 2002 was
12.8 per cent compared to 5.2 per cent in 2001. Adjusting 2001 for Princeton and
goodwill amortisation, net income as a percentage of average common equity was
12.9 per cent.

* The cost:income ratio for 2002 was 54.6 per cent compared to 75.7 per cent in
2001. Excluding the provision for Princeton and goodwill amortisation, the cost:
income ratio was 53.3 per cent in 2001.

* Tier 1 capital to risk-weighted assets was 9.4 per cent at 31 December 2002
compared to 8.3 per cent at 31 December 2001.

* Total assets under administration at 31 December 2002 were US$47.8 billion, of
which US$33.3 billion were funds under management and US$14.5 billion were
custody accounts.

Financial Commentary

HSBC USA Inc. reported net income of US$855 million for the year ended 31
December 2002, compared to US$353 million for the year ended 31 December 2001.
Net income in 2001 included a US$351 million after tax provision for the
settlement of Princeton, and US$176 million of goodwill amortisation, not
included in 2002 earnings under new US GAAP accounting rules. When 2001 is
adjusted for these items, net income decreased by 3 per cent to US$855 million
for the year ended 31 December 2002 from US$880 million for the year ended 31
December 2001, although net income before taxes increased by 3 per cent year
over year.

For the quarter ended 31 December 2002, net income totalled US$228 million
compared with US$152 million for the same period last year. Fourth quarter net
income in 2001 included US$43 million of goodwill amortisation not included in
the fourth quarter of 2002. When 2001 is adjusted for this, net income increased
by 17 per cent to US$228 million in the 2002 fourth quarter from US$195 million
in the same period last year, while pre tax income increased 27 per cent to
US$369 million from US$291 million.

Commenting on the results, Youssef A Nasr, Chief Executive Officer of HSBC USA
Inc., said: "We are pleased with the results that we have reported today given
the fact that they were achieved during a time of tough economic conditions and
highly volatile securities markets. They reflect steady progress with our
customer bases and we are optimistic about our continuing growth in brokerage,
insurance, asset management, private banking and other fee generating
businesses.

"We continue to improve the services that we provide our customers. In 2002, we
aligned our US and Canadian operations to be able to provide seamless cross
border banking services to our customers on either side of the border. The
realignment has already provided us with a significant increase in new cross
border business opportunities. During the fourth quarter, HSBC Holdings plc, our
parent, acquired GFBital, one of Mexico's largest banks, and we are enthusiastic
about the additional coverage this will enable us to provide to our customers
across the NAFTA countries.

"In November, HSBC Holdings plc announced that it had signed an agreement to
acquire Household International, Inc. Since then we have made progress with the
necessary competition and regulatory filings. Subject to that process being
concluded and to obtaining shareholder approvals the acquisition is expected to
be completed by the end of the first quarter of this year, and should provide us
with the opportunity to offer a broader range of products to customers of both
HSBC and Household."

Net interest income

For the year ended 31 December 2002, net interest income increased by US$111
million, or almost 5 per cent, to US$2.4 billion. This increase reflects the
impact of growth in the balance sheet, primarily residential mortgage loans, and
wider interest margins in both residential mortgages and treasury investments.

Other operating income

While other operating income of US$1.1 billion was down slightly, US$36 million
or 3 per cent, compared to 2001, driven by lower levels of market sensitive
trading revenues, solid growth was achieved in most categories of fee based
income.

Fees and commissions, including wealth management revenues, fees on deposit and
cash management products, and bankcard fees, grew 16 per cent from US$607
million for the year ended 31 December 2001 to US$705 million for the year ended
31 December 2002. Brokerage revenues increased 32 per cent to US$106 million in
2002 from US$80 million in 2001 due in part to sales of annuity products and
increased transaction volumes. Revenues related to the sale of annuity products
increased by more than US$22 million or 71 per cent compared to 2001. Insurance
revenues increased by 42 per cent to US$46 million for the year ended 31
December 2002, up from US$33 million in 2001. Over 1,500 professionals are now
licensed to sell insurance and certain annuity products through the bank's
retail network. Service charges also increased by almost 10 per cent to US$207
million for the year ended 31 December 2002 from US$189 million in 2001.

Difficult conditions in the capital markets prevented a recurrence of 2001's
strong results in areas that are more market sensitive. Treasury trading
revenues for the full-year 2002 were US$130 million, a decrease of US$136
million in 2001. Mortgage other operating income, including servicing fees net
of impairment, origination gains and related hedge costs, was flat to 2001.
Securities gains for the year ended 31 December 2002 were US$118 million, a
decrease of US$31 million from US$149 million in the comparable period in 2001.

Operating expenses

Operating expenses decreased by 26 per cent to US$1.9 billion for the year-ended
31 December 2002 compared to US$2.5 billion in 2001. Excluding the effect of the
goodwill change and Princeton, operating expenses increased by US$84 million, or
5 per cent. This included higher reserves for letters of credit and for a
leveraged lease, the costs associated with the acquired Wealth and Tax Advisory
Services business, and the costs of severance and certain volume driven
incentive compensation programmes.

The cost:income ratio for the year ended 31 December 2002 was 54.6 per cent
compared to 75.7 per cent in 2001. The ratio for 2001, put on a comparable basis
by excluding the provision for Princeton and goodwill amortisation, was 53.3 per
cent.

Provision for Income Taxes

The provision for income taxes was US$510 million for the full-year 2002,
compared to US$226 million in the comparable period for 2001. The effective tax
rate was 37.4 per cent in 2002 and 39.0 per cent in 2001. Excluding the
Princeton provision and goodwill amortisation from last year's expenses, the
2001 effective tax rate was approximately 33.8 per cent.

Credit Quality and Provisions for Credit Losses

The provision for credit losses of US$195 million was US$43 million lower than
in 2001, reflecting the improvement in credit quality during the latter part of
2002. Net charge-offs of US$206 million for the year ended 31 December 2002 were
US$32 million lower than in 2001. The reserve to non-accrual ratio increased to
127.3 per cent at 31 December 2002 from 121.5 per cent at 31 December 2001.

Balance Sheet

Total assets of HSBC USA Inc. grew approximately 3 per cent to US$89.4 billion
at 31 December 2002 compared to US$87.1 billion at 31 December 2001. Total
deposits grew 5 per cent to US$59.3 billion at 31 December 2002, compared to
US$56.5 billion at 31 December 2001. Total loans grew almost 7 per cent to
US$43.6 billion at 31 December 2002 from US$40.9 billion at 31 December 2001.

Residential mortgage loans held in the portfolio increased, and lower margin
corporate loans were reduced. HSBC Bank USA's residential mortgage business,
with approximately 335,000 customers, originated US$21.2 billion in mortgages in
2002, an increase of more than 41 per cent over the US$15.0 billion originated
in 2001.

Total Assets Under Administration

Total funds under management at 31 December 2002 were US$33.3 billion, up US$937
million, or almost 3 per cent from 31 December 2001, largely due to the movement
of new and existing deposits to investment products. Including custody balances,
assets under administration at 31 December 2002 totalled US$47.8 billion.

Capital Ratios

HSBC USA Inc.'s tier 1 capital to risk-weighted assets ratio was 9.4 per cent at
31 December 2002 compared to 8.3 per cent at 31 December 2001. Total capital to
risk-weighted assets was 14.2 per cent at 31 December 2002, compared to 13.3 per
cent at 31 December 2001.

As part of its strategy of providing customers with multiple choices for product
and service delivery, HSBC Bank USA offers a comprehensive internet banking
service. At 31 December 2002, more than 410,000 customers had registered for the
service, up from approximately 275,000 at year-end 2001. The HSBC Bank USA web
site, us.hsbc.com, where customers can apply for accounts, conduct financial
planning and link to online services, receives approximately 49,000 visits
daily. In addition, debit card usage has increased by more than 31 per cent to
approximately thirty three million transactions in 2002.

About HSBC Bank USA

HSBC Bank USA has more than 410 branches in New York State, giving it the most
extensive branch network in New York State. The bank also has eight branches in
Florida, two in Pennsylvania, four in California and 15 in Panama.

HSBC Bank USA is the tenth largest US commercial bank ranked by assets and is a
wholly-owned subsidiary of HSBC USA Inc., an indirectly-held, wholly-owned
subsidiary of HSBC Holdings plc (NYSE: HBC). Headquartered in London, and with
over 8,000 offices in 80 countries and territories, the HSBC Group is one of the
world's largest banking and financial services organisations.

For more information about HSBC Bank USA and its products and services visit
www.us.hsbc.com.

Summary
                                                                   Quarter ended                   Year ended
Figures in US$ millions                                          31Dec02       31Dec01       31Dec02         31Dec01

Earnings
Net income                                                           228           152           855             353
Net income, excluding Princeton and goodwill
 amortisation                                                                      195                           880

Performance ratios (%)
Net income as a percentage of
 average common equity                                              13.3           8.9          12.8             5.2
Net income as a percentage of average common
 equity, excluding Princeton and goodwill
 amortisation                                                                     11.4                          12.9
Net interest margin                                                  2.8           2.7           2.7             2.7
Cost:income ratio                                                   55.7          59.8          54.6            75.7
Cost: income ratio, excluding Princeton and
 goodwill amortisation                                                            54.8                          53.3
Other operating income to total income                              29.9          30.4          30.8            32.6

Credit information
Non-accruing loans at end of period                                                              387             417
Net charge-offs                                                       74           129           206             238
Allowance available for credit losses
- Balance at end of period                                                                       493             506
- As a percentage of non-accruing loans                                                        127.3 %         121.5 %
- As a percentage of loans outstanding                                                           1.1 %           1.2 %

Average balances
Assets                                                            89,229        87,883        87,780          86,276
Loans                                                             42,792        41,935        42,054          41,441
Deposits                                                          56,758        56,452        57,576          57,430
Common equity                                                      6,785         6,765         6,700           6,834

Capital ratios (%) at end of period
Leverage ratio                                                                                   6.0             5.5
Tier 1 capital to risk-weighted assets                                                           9.4             8.3
Total capital to risk-weighted assets                                                           14.2            13.3

Assets under administration at end of period
Funds under management                                                                        33,287          32,350
Custody accounts                                                                              14,537          16,328
Total assets under administration                                                             47,824          48,678

Consolidated Statement of Income
                                                                   Quarter ended                   Year ended
Figures in US$ millions                                         31Dec02        31Dec01          31Dec02        31Dec01

Interest income
Loans                                                            624             670           2,521          2,937
Securities                                                       242             270             952          1,260
Trading assets                                                    43              41             161            217
Short-term investments                                            27              57             150            345
Other interest income                                              7               6              23             28
Total interest income                                            943           1,044           3,807          4,787
Interest expense
Deposits                                                         201             324             936          1,857
Short-term borrowings                                             54              54             232            337
Long-term debt                                                    63              71             263            328
Total interest expense                                           318             449           1,431          2,522
Net interest income                                              625             595           2,376          2,265
Provision for credit losses                                       26              95             195            238
Net interest income, after provision for credit losses           599             500           2,181          2,027
Other operating income
Trust income                                                      23              22              95             88
Service charges                                                   54              50             207            189
Mortgage banking revenue ^                                        62              56             110             79
Other fees and commissions                                       108              84             403            330
Trading revenues
- Treasury business and other                                     73              75             130            266
- Residential mortgage business related ^^                       (63 )           (52 )           (97 )          (67 )
Total trading revenues                                            10              23              33            199
Security gains (losses), net                                      (2 )             3             118            149
Other income                                                      12              21              94             62
Total other operating income                                     267             259           1,060          1,096
Total income from operations                                     866             759           3,241          3,123
Operating expenses
Salaries and employee benefits                                   279             272           1,029          1,000
Occupancy expense, net                                            42              39             156            156
Princeton note matter                                              -               -               -            575
Other expenses                                                   176             157             691            636
Operating expenses before goodwill amortisation                  497             468           1,876          2,367
Goodwill amortisation                                              -              43               -            176
Total operating expenses                                         497             511           1,876          2,543
Income before taxes and cumulative effect of
 accounting change                                               369             248           1,365            580
Applicable income tax expense                                    141              96             510            226
Income before cumulative effect of accounting
 change                                                          228             152             855            354
Cumulative effect of accounting change-
 implementation of SFAS 133                                        -               -               -             (1 )
Net income                                                       228             152             855            353

^ Mortgage banking revenue includes mortgage servicing fees, gains on sale of
mortgages and fair value adjustments related to qualifying hedges (under FAS
133) of residential mortgages originated for sale.

^^ Trading revenues include the mark-to-market on non-qualifying financial
instruments (under FAS 133) providing economic protection on mortgage servicing
rights values and interest rate and forward sales commitments in the residential
mortgage business.

Consolidated Balance Sheet
Figures in US$ millions                                          At 31Dec02            At 31Dec01

Assets
Cash and due from banks                                               2,081                 2,103
Interest bearing deposits with banks                                  1,048                 3,561
Federal funds sold and securities purchased
 under resale agreements                                              2,743                 3,745
Trading assets                                                       13,408                 9,089
Securities available for sale                                        14,694                15,268
Securities held to maturity                                           4,629                 4,651
Loans                                                                43,636                40,923
Less - allowance for credit losses                                      493                   506
Loans, net                                                           43,143                40,417

Premises and equipment                                                  726                   750
Accrued interest receivable                                             329                   417
Equity investments                                                      278                   271
Goodwill                                                              2,829                 2,842
Other assets                                                          3,518                 4,000
Total assets                                                         89,426                87,114

Liabilities
Deposits in domestic offices
- Non-interest bearing                                                5,731                 5,432
- Interest bearing                                                   34,352                31,696
Deposits in foreign offices
- Non-interest bearing                                                  398                   428
- Interest bearing                                                   18,799                18,951
Total deposits                                                       59,280                56,507

Trading account liabilities                                           7,710                 3,800
Short-term borrowings                                                 7,392                 9,202
Interest, taxes and other liabilities                                 3,422                 6,065
Subordinated long-term debt and perpetual capital
 notes                                                                2,109                 2,712
Guaranteed mandatorily redeemable securities                          1,051                   728
Other long-term debt                                                  1,065                 1,051
Total liabilities                                                    82,029                80,065

Shareholders' equity
Preferred stock                                                         500                   500
Total common shareholders' equity
- Common stock ^                                                          -                     -
- Capital surplus                                                     6,057                 6,034
- Retained earnings                                                     578                   416
- Accumulated other comprehensive income                                262                    99
Total common shareholders' equity                                     6,897                 6,549
Total shareholders' equity                                            7,397                 7,049
Total liabilities and shareholders' equity                           89,426                87,114

^ Less than $500,000.


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