Hang Seng Bank - Pt2 Results

HSBC Hldgs PLC
26 February 2001

HSBC Hldgs PLC
News Release 4 Part(2)of(2)

Hang Seng Bank Limited                                    Financial Review
                                                               (continued)


Rescheduled advances to customers

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

                                           
                                        At 31Dec00    At 31Dec99
                                        HK$m     %    HK$m     %
                                                                
Rescheduled advances to customers^     2,756   1.2   1,761   0.9
                                                               
^Stated after deduction of interest in suspense.


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

Rescheduled advances to customers are stated net of any advances
that have subsequently become overdue for over three months and
are included in overdue advances to customers (page 18).

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 in an area
which is different from that of the counterparty.
At 31 December 2000, 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 (the same
as the position at 31 December 1999).

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 31Dec00     At 31Dec99 
                                                                   
Gross advances to customers for use                                
in Hong Kong                                                        
                                                                   
Industrial, commercial and financial                               
  sectors                                                          
Property development                         19,079         16,508 
Property investment                          29,579         23,231 
Financial concerns                            2,979          3,715 
Stockbrokers                                     97            340 
Wholesale and retail trade                    4,066          4,504 
Manufacturing                                 1,825          1,890 
Transport and transport equipment             8,471          8,411 
Other                                        19,073         17,443 
                                             85,169         76,042 
                                                                   
Individuals                                                        
Advances for the purchase of flats                                 
  under the Government                                             
  Home Ownership Scheme, Private                                   
Sector Participation
  Scheme and Tenants Purchase Scheme         35,971         31,936 
Advances for the purchase of other                                 
  residential properties                     78,005         73,854 
Credit card advances                          4,745          3,835 
Other                                         4,875          4,514 
                                            123,596        114,139 
Total gross advances for use in Hong                               
  Kong                                      208,765        190,181 
Trade finance                                 9,013          8,787 
Gross advances for use outside Hong                                
  Kong                                        4,195          3,276 
Gross advances to customers                 221,973        202,244 
                                                                   


Lending to the industrial, commercial and financial sectors grew
by HK$9,127 million, or 12.0 per cent. The 15.6 per cent growth
in the property development sector was mainly from lending to
large developers for residential development projects and
general working capital. Property investment lending rose by
27.3 per cent, mainly to finance the holding of completed
residential development projects by the developers and the
acquisition of residential properties for rental purpose by
property investment companies.

Advances to individuals rose by HK$9,457 million, or 8.3 per
cent. Residential mortgages and Government Home Ownership Scheme
mortgages continued to expand amid severe price competition.
Credit card advances also showed satisfactory growth as a result
of the expansion in the card base and the improvement in
consumer sentiment.

Long-term investments

                                                Carrying Value       
                                          
Figures in HK$m                          At 31Dec00    At 31Dec99 
                                                                  
Held-to-maturity debt securities                                  
Issued by public bodies                                           
- Central governments and central                                 
  banks                                       3,459         2,720 
- Other public sector entities                7,381         6,055 
                                             10,840         8,775 
Issued by other bodies                                            
- Banks and other financial                                       
  institutions                               15,480         9,753 
- Corporate entities                          8,517         3,868 
                                             23,997        13,621 
                                             34,837        22,396 
Equity investments                                                
Issued by corporate entities                  4,433         4,921 
                                             39,270        27,317 
                                                                  
Held-to-maturity debt securities                                  
- Listed in Hong Kong                           419           703 
- Listed outside Hong Kong                    4,881         2,062 
                                              5,300         2,765 
- Unlisted                                   29,537        19,631 
                                             34,837        22,396 
Equity investments                                                
- Listed in Hong Kong                         4,139         4,766 
- Listed outside Hong Kong                      114            85 
                                              4,253         4,851 
- Unlisted                                      180            70 
                                              4,433         4,921 
                                             39,270        27,317 
                                                                  

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 redemption.
Equity investments are stated at fair value, less provision for
impairment.

Long-term investments rose by HK$11,953 million, or 43.8 per
cent, compared with the end of 1999. The portfolio of held-to-
maturity debt securities expanded by HK$12,441 million,
or 55.6 per cent, comprising securities issued by governments,
banks and other financial institutions and corporations. Equity
investments were HK$488 million, or 9.9 per cent lower, due to
disposals and a reduction in fair value.

Long-term investments (continued)

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

                                                  Fair Value         
                                             
Figures in HK$m                          At 31Dec00     At31Dec99 
                                                                  
Held-to-maturity debt securities                                  
Issued by public bodies                                           
- Central governments and central                                 
  banks                                       3,471         2,712 
- Other public sector entities                7,537         6,057 
                                             11,008         8,769 
Issued by other bodies                                            
- Banks and other financial                  15,510         9,735 
  institutions
- Corporate entities                          8,595         3,841 
                                             24,105        13,576 
                                             35,113        22,345 
                                                                  
Held-to-maturity debt securities                                  
- Listed in Hong Kong                           425           707 
- Listed outside Hong Kong                    4,940         2,057 
                                              5,365         2,764 
- Unlisted                                   29,748        19,581 
                                             35,113        22,345 
                                                                  

Other assets

                                              
Figures in HK$m                            At 31Dec00    At 31Dec99 
                                                                    
Unrealised gains on off-balance sheet                               
  interest rate, exchange                                           
  rate and other derivative                                         
  contracts which are marked to market          1,800         1,270 
Items in the course of collection from                              
  other banks                                   4,472         4,017 
Prepayments and accrued income                  3,849         3,094 
Other accounts                                  1,206           809 
                                               11,327         9,190 
                                                                  

Current, savings and other deposit accounts

                                              
Figures in HK$m                            At 31Dec00     At 31Dec99 
                                                                     
Customer accounts                             414,875        364,038 
Certificates of deposit in issue               14,730         11,673 
                                              429,605        375,711 
                                                                   

Current, savings and other deposit accounts rose by HK$53.9
billion, or 14.3 per cent, to HK$429.6 billion, compared with
HK$375.7 billion at 31 December 1999. The growth was mainly in
US dollar time deposits and HK dollar time deposits and savings
accounts.

Certificates of deposit in issue increased by HK$3.1 billion, or
26.2 per cent, to HK$14.7 billion at 31 December 2000.


Shareholders' funds

                                              
Figures in HK$m                            At 31Dec00    At 31Dec99 
                                                                    
Share capital                                   9,559         9,559 
Retained profits                               18,732        17,729 
Premises and investment properties                                  
  revaluation reserves                          8,742         8,228 
Long-term equity investment revaluation                             
  reserve                                       3,452         3,959 
Capital redemption reserve                         99            99 
Reserves                                       31,025        30,015 
Shareholders' funds                            40,584        39,574 
                                                                  
Return on average shareholders' funds            23.6%         17.6%
                                                                  

There was no purchase, sale or redemption of the bank's listed
securities by the bank or any of its subsidiaries during the
year.

Shareholders' funds grew by HK$1,010 million to HK$40,584
million at 31 December 2000, mainly from profit after
appropriation for the year. The long-term equity investment
revaluation reserve decreased by HK$507 million, due to
realisation on disposals and the fall in fair value of locally-
listed equities at 31 December 2000. The premises and investment
properties revaluation reserves increased by HK$514 million,
reflecting a rebound in the commercial property market.

The return on average shareholders' funds for 2000 improved
substantially to a record high of 23.6 per cent, compared with
17.6 per cent for 1999, benefiting from the growth in
attributable profit for the year and lower average shareholders'
funds following the distribution of the special interim dividend
in November 1999.

Capital resources management

Analysis of capital base and risk-weighted assets

                                            
Figures in HK$m                          At 31Dec00     At 31Dec99 
                                                                   
Capital base                                                       
Tier 1 capital                                                     
- Share capital                               9,559          9,559 
- Retained profits                           18,455         17,489 
- Capital redemption reserve                     99             99 
- Total                                      28,113         27,147 
                                                                   
Tier 2 capital                                                     
- Premises and investment properties                               
  revaluation reserves                        5,860          5,786 
- Long-term equity investment                                      
  revaluation reserve                         2,043          2,266 
- General loan provisions                     1,437          1,440 
- Total                                       9,340          9,492 
                                                                   
Unconsolidated investments and other                               
  deductions                                 (1,346)        (1,350)
Total capital base after deductions          36,107         35,289 
                                                                   
Risk-weighted assets                                               
On-balance sheet                            220,037        193,541 
Off-balance sheet                            13,982          9,783 
Total risk-weighted assets                  234,019        203,324 
Total risk-weighted assets adjusted                                
  for market risk                           235,453        204,141 
                                                                   
Capital adequacy ratios                                            
After adjusting for market risk                                    
- Tier 1^                                      11.9%          13.3%
- Total^                                       15.3%          17.3%
                                                                   
Before adjusting for market risk                                   
- Tier 1                                       12.0%          13.4%
- Total                                        15.4%          17.4%
                                                                   

^The capital ratios take into account market risks in accordance
with the relevant Hong Kong Monetary Authority guideline.

The total capital ratio was 15.3 per cent at 31 December 2000,
compared with 17.3 per cent at 31 December 1999. The tier 1
capital ratio was 11.9 per cent (13.3 per cent at 31 December
1999). The capital base recorded a moderate growth of 2.3 per
cent. Risk-weighted assets adjusted for market risk, on the
other hand, grew by 15.3 per cent, mainly attributable to the
rise in advances to customers, interbank assets and debt
securities.

Liquidity ratio

The average liquidity ratio for the year, calculated in
accordance with the Fourth Schedule of the Banking Ordinance, is
as follows:

                                             2000          1999 
                                                                
The bank and its major banking                                  
  subsidiaries                               43.3%         42.4%
                                                                

Reconciliation of cash flow statement

(a) Reconciliation of operating profit to net cash flow from
operating activities

Figures in HK$m                                  2000         1999 
                                                                  
Operating profit                               11,344        9,646 
Provisions for bad and doubtful debts             196        1,419 
Depreciation                                      388          378 
Amortisation of long-term investments            (571)        (368)
Advances written off net of recoveries           (707)        (993)
Income receivable on long-term                                     
  investments                                  (1,863)      (1,280)
Net cash inflow from trading                                       
  activities                                    8,787        8,802 
                                                                   
Change in cash and short-term funds            (8,377)       7,267 
                                                                   
Change in placings with banks                                      
  repayable after three months                     95         (617)
Change in certificates of deposit              (5,333)      (2,147)
Change in securities held for dealing                              
  purposes                                     (4,206)          (6)
Change in advances to customers               (19,729)         569 
Change in amounts due from immediate                               
  holding company and fellow                                       
  subsidiary companies                          1,093         (355)
Change in other assets                         (1,896)      (1,871)
Change in customer accounts                    50,837       22,465 
Change in certificates of deposit in                               
  issue                                         3,057          958 
Change in deposits from banks                  (3,087)      (1,908)
Change in amounts due to immediate                                 
  holding company and fellow                                       
  subsidiary companies                           (782)         520 
Change in other liabilities                     6,391        2,633 
Elimination of exchange differences                                
  and other non-cash items                      1,913       (2,336)
Net cash inflow from operating                                     
  activities                                   28,763       33,974 
                                                                   

Reconciliation of cash flow statement (continued)

(b)  Analysis of the changes in cash and cash equivalents during
  the year

Figures in HK$m                                2000           1999 
                                                                   
Balance at 1 January                         150,579        134,205 
Net cash inflow before the effect of                                
  foreign exchange movements                   8,472         15,125 
Effect of foreign exchange movements          (1,540)         1,249 
Balance at 31 December                       157,511        150,579 
                                                                    

(c) Analysis of the balances of cash and cash equivalents

                                          
Figures in HK$m                            At 31Dec00     At31Dec99 
                                                                   
Cash in hand and balances with banks                               
  and other financial institutions              4,330         5,122 
Money at call and placings with banks                               
  maturing within one month                   113,626       110,795 
Treasury bills                                  1,522           771 
Placings with banks repayable between                               
  one to three months                          37,136        33,221 
Certificates of deposit                           897           670 
                                              157,511       150,579 
                                                                    

Contingent liabilities, commitments and derivatives

                                                 Credit      Risk- 
                                   Contract  equivalent   weighted 
Figures in HK$m                      amount      amount     amount 
                                                                  
At 31 December 2000                                               
                                                                  
Contingent liabilities:                                           
Guarantees                            3,829       3,763      2,963 
                                                                  
Commitments:                                                      
Documentary credits and                                           
  short-term trade-related                                        
  transactions                        5,801       1,168      1,160 
Undrawn formal standby                                            
  facilities, credit lines                                        
  and other commitments to                                        
  lend:                                                           
- Under one year                     59,665          -         - 
- One year and over                  18,438       9,219      8,975 
                                     83,904      10,387     10,135 
                                                                  
Exchange rate contracts:                                          
Spot and forward foreign                                          
  exchange                          169,896       2,886        647 
Other exchange rate                                               
  contracts                           6,504         174         37 
                                    176,400       3,060        684 
                                                                  
Interest rate contracts:                                          
Interest rate swaps                  46,951         842        201 
Other interest rate                                               
  contracts                           6,229          -          - 
                                     53,180         842        201 
                                                                  
                                                                  

Contingent liabilities, commitments and derivatives (continued)

                                                  Credit     Risk- 
                                    Contract  equivalent  weighted 
Figures in HK$m                       amount      amount    amount 
                                                                   
At 31 December 1999                                                
                                                                   
Contingent liabilities:                                            
Guarantees                             2,267       2,183     1,171 
                                                                   
Commitments:                                                       
Documentary credits and short-                                     
  term trade-related                                               
  transactions                         5,778       1,156     1,156 
Undrawn formal standby                                             
  facilities, credit lines                                         
  and other commitments to                                         
  lend:                                                            
- Under one year                      51,432          -        -
- One year and over                   14,716       7,358     6,926 
                                      71,926       8,514     8,082 
                                                                   
Exchange rate contracts:                                           
Spot and forward foreign                                           
  exchange                           132,608       2,484       547 
Other exchange rate contracts            786          20         3 
                                     133,394       2,504       550 
                                                                   
Interest rate contracts:                                           
Interest rate swaps                   21,250         178        39 
Other interest rate contracts          7,921           1         - 
                                      29,171         179        39 
                                                                   
                                                                   

The tables above give the nominal contract, credit equivalent
and risk-weighted amounts of off-balance sheet transactions. The
credit equivalent amounts are calculated for the purposes of
deriving the risk-weighted amounts. These are assessed in
accordance with the Third Schedule of the Banking Ordinance on
capital adequacy and depend on the status of the counterparty
and the maturity characteristics. The risk weights used range
from 0 per cent to 100 per cent for contingent liabilities and
commitments, and from 0 per cent to 50 per cent for exchange
rate, interest rate and other derivative contracts.

Contingent liabilities and commitments are credit-related
instruments which include acceptances, letters of credit,
guarantees and commitments to extend credit. The risk involved
is essentially the same as the credit risk involved in extending
loan facilities to customers. These transactions are, therefore,
subject to the same credit origination, portfolio maintenance
and collateral requirements as for customers applying for loans.
As the facilities may expire without being drawn upon, the total
of the contract amounts is not representative of future
liquidity requirements.

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

The contract amounts of these instruments indicate the volume of
transactions outstanding at the balance sheet date and do not
represent amounts at risk. The credit equivalent amount of these
instruments is  measured as the sum of positive mark-to-market
values and the potential future credit exposure in accordance
with the Third Schedule of the Banking Ordinance.

                                             
Figures in HK$m                        At 31Dec00    At 31Dec99 
                                                                  
Replacement cost                                                
Exchange rate contracts                     1,491         1,487 
Interest rate contracts                       722           127 
                                            2,213         1,614 
                                                                

The replacement cost of contracts represents the mark-to-market
assets on all contracts (including non-trading contracts) with a
positive value and which have not been subject to any bilateral
netting arrangement.

Segmental analysis by geographical region

The information concerning geographical analysis has been
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.

                                            2000           1999 
                                        HK$m     %     HK$m      % 
                                                                    
Total operating income (net of                                      
  interest expense)                                                
Hong Kong                            14,482     95   14,229     96 
Americas                                741      5      548      4 
Other                                    42      -       31      - 
                                     15,265    100   14,808    100 
                                                                   
Profit on ordinary activities                                      
  before tax                                                       
Hong Kong                            10,937     94    9,578     98 
Americas                                720      6      556      6 
Other                                    18      -     (350)    (4)
                                     11,675    100    9,784    100 
                                                                   
                                     
                                        At 31Dec00       At 31Dec99 
                                      HK$m       %      HK$m      % 
                                                                       
Total assets                                                       
Hong Kong                          431,574      86   384,524     87 
Americas                            63,055      13    52,388     12 
Other                                6,155       1     5,158      1 
                                   500,784     100   442,070    100 
                                                                       
Total liabilities                                                  
Hong Kong                          445,058      97   389,358     97 
Americas                            10,630       2     9,717      2 
Other                                4,512       1     3,421      1 
                                   460,200     100   402,496    100 
                                                                   
Contingent liabilities and                                         
  commitments                                                      
Hong Kong                           84,939      97    71,678     97 
Americas                               414       -       509      1 
Other                                2,380       3     2,006      2 
                                    87,733     100    74,193    100 
                                                                       
Additional information

1. Accounting policies

This news release has been prepared on a basis consistent with
the accounting policies adopted in the 1999 financial
statements.

2. Property revaluation

The bank's premises and investment properties were revalued by
HSBC Property (Asia) Limited, which is a fellow subsidiary
company of the bank, as at 30 November 2000. The valuations were
carried out by qualified valuers who are members of the Hong
Kong Institute of Surveyors. The basis of the valuation for
premises was open market value for existing use. The basis of
the valuation for investment properties was open market value.
The property revaluation has resulted in a surplus of HK$612
million, of which HK$584 million has been credited to the bank's
revaluation reserves at 31 December 2000. The remaining amount
of HK$28 million has been credited to the profit and loss
account. This represented the reversal of revaluation deficits
of the same properties which had been previously charged to the
profit and loss account when their market values fell below
depreciated historical costs.

3. Market risk

Market risk is the risk that the movements in interest rates,
foreign exchange rates or equity and commodity prices will
result in profits or losses to Hang Seng. 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 (accrual basis). Hang Seng's market risk arises from
customer-related business and from position taking.

Market risk is managed within risk limits approved by the Board
of Directors. Risk limits are set by product and risk type with
market liquidity being a principal factor in determining the
level of limits set. 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.

Hang Seng follows the risk management policies and risk
measurement techniques developed by the HSBC Group. The daily
risk monitoring process measures actual risk exposures against
approved limits and triggers specific action to ensure the
overall market risk is managed within an acceptable level.

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 model used by Hang Seng calculates VaR
on a variance/covariance basis, using historical movements in
market rates and prices, a 99 per cent confidence level and a 10-
day holding period, and generally takes account of correlations
between different markets and rates. The movement in market
prices is calculated by reference to market data for the last
two years. Aggregation of VaR from different risk types is based
upon the assumption of independence between risk types.

Hang Seng has obtained approval from the Hong Kong Monetary
Authority (HKMA) for the use of its VaR model to calculate
market risk for capital adequacy reporting. The HKMA is also
satisfied with Hang Seng's market risk management process.

The VaR for all interest rate risk and foreign exchange risk
positions at 31 December 2000 was HK$213 million, compared with
HK$199 million at 31 December 1999. The average value at risk
for 2000 was HK$179 million, with a maximum of HK$243 million
and minimum of HK$119 million in the year. On an individual
portfolio basis, the values at risk at 31 December 2000 relating
to the trading portfolio and accrual portfolio were HK$7 million
(HK$18 million at 31 December 1999) and HK$212 million (HK$198
million at 31 December 1999) respectively.

The average daily revenue earned from market risk-related
treasury activities in 2000, including accrual book net interest
income and funding related to dealing positions, was HK$5
million (HK$7 million for 1999). The standard deviation of these
daily revenues was HK$3 million (HK$4 million for 1999). An
analysis of the frequency distribution of daily revenues shows
that out of 247 trading days in 2000, losses were recorded on
only 5 days and the maximum daily loss was HK$5 million. The
most frequent result was a daily revenue of between HK$2 million
and HK$6 million, with 175 occurrences. The highest daily
revenue was HK$23 million.

Hang Seng's foreign exchange exposures mainly comprise foreign
exchange dealing by Treasury and currency exposures originated
by its banking business. The latter are transferred to Treasury
where they are centrally managed within foreign exchange
position limits approved by the Board of Directors.

The VaR relating to foreign exchange positions was HK$6 million
at 31 December 2000 (HK$18 million at 31 December 1999) and the
average amount for 2000 was HK$8 million, with a maximum of
HK$20 million and a minimum of HK$0.1 million in the year. The
average one-day foreign exchange profit for 2000 was HK$1
million (HK$2 million for 1999).

Interest rate risk arises in both the treasury dealing portfolio
and accruals books, which are managed by Treasury under limits
approved by the Board of Directors. The VaR relating to interest
rate exposures was HK$213 million at 31 December 2000 (HK$198
million at 31 December 1999) and the average amount for 2000 was
HK$178 million, with a maximum of HK$243 million and a minimum
of HK$119 million in the year. The average daily revenue earned
from treasury-related interest rate activities for 2000 was HK$4
million (HK$5 million for 1999).

Structural interest rate risk arises primarily from the
employment of non-interest bearing liabilities, such as
shareholders' funds and some current accounts, as well as fixed
rate loans and liabilities other than those generated by the
treasury business. Structural interest rate risk is monitored by
Hang Seng's Asset and Liability Management Committee.


4. Material related-party transactions

(a) Immediate holding company and fellow subsidiary companies

In 2000, Hang Seng entered into transactions with its immediate
holding company and fellow subsidiary companies in the ordinary
course of its interbank activities including the acceptance and
placement of interbank deposits, correspondent banking
transactions and off-balance sheet transactions. The activities
were priced at the relevant market rates at the time of the
transactions. Hang Seng used the IT services of, and shared an
automated teller machine network with, its immediate holding
company on a cost recovery basis. Hang Seng also maintained a
staff retirement benefit scheme for which a fellow subsidiary
company acts as insurer and administrator.

The aggregate amount of income and expenses arising from these
transactions during the year, and the balances of amounts due to
and from relevant related parties and the total contract sum of
off-balance sheet transactions at the end of the year are as
follows:

Income and expenses for the year                                
                                          Year ended 31 December 
Figures in HK$m                               2000          1999 
                                                                
Interest income                                702           671 
Interest expense                                81            61 
Operating expenses                             537           470 

Balances at the year-end                                        
                                            
Figures in HK$m                        At 31Dec00    At 31Dec99 
                                                                
Total amount due from                      10,383        12,154 
Total amount due to                         1,999         2,781 
Total contract sum of off-balance                               
  sheet transactions                       41,510        23,531 

(b) Associated companies

Hang Seng maintains an interest-free shareholders' loan to an
associated company. The balance at 31 December 2000 was HK$208
million (HK$208 million at 31 December 1999). Hang Seng acts as
agent for the marketing of life insurance products for an
associated company. Total agency commissions received during the
year ended 2000 amounted to HK$171 million (HK$54 million for 1999).

(c) Ultimate holding company

In 2000, no transaction was conducted with the bank's ultimate
holding company (same for the year 1999).

(d) Key management personnel

In 2000, no material transaction was conducted with key
management personnel of Hang Seng and its holding companies and
parties related to them (same for the year 1999).

5. Statutory accounts

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

Certain financial information in this news release is extracted
from the statutory accounts for the year ended 31 December 2000,
which will be delivered to the Registrar of Companies and the
Hong Kong Monetary Authority. The auditors expressed an
unqualified opinion on those statutory accounts in their report
dated 26 February 2001.

6. Ultimate holding company

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


7. Statement of compliance

This news release complies with the 'Financial Disclosure by
Locally Incorporated Authorised Institutions' issued by the Hong
Kong Monetary Authority on 23 November 2000.


8. Register of shareholders

The Register of Shareholders of Hang Seng Bank will be closed on
Wednesday, 14 March 2001 and Thursday, 15 March 2001, during
which no transfer of shares can be registered. In order to
qualify for the second interim dividend, all transfers,
accompanied by the relevant share certificates, must be lodged
with the bank's Registrars, Central Registration Hong Kong
Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queen's Road East, Wanchai, Hong Kong, for registration not
later than 4:00 pm on Tuesday, 13 March 2001. The second interim
dividend will be payable on Thursday, 22 March 2001 to
shareholders on the Register of Shareholders of the bank on
Thursday, 15 March 2001.

Additional information (continued)

9. News release

Copies of this news release can be obtained from the Company
Secretary Department, Level 10, 83 Des Voeux Road Central, Hong
Kong. The news release and the statutory accounts for the year
ended 31 December 2000 may be obtained from Hang Seng's website
http://www.hangseng.com.

The 2000 Annual Report and Accounts will be available from the
same website by 19 March 2001 and will also be published in the
website of The Stock Exchange of Hong Kong Limited in due
course. Printed copies of the 2000 Annual Report and Accounts
will be sent to shareholders in late-March 2001.