Hang Seng Bk-Int Rslts-Pt 2

HSBC Hldgs PLC
31 July 2000



Part 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 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999     
                             HK$m         % HK$m         % HK$m         %
                                                                 
Rescheduled advances to     
customers ^                 1,745       0.8  725       0.4 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 19).

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 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                                                                         
Gross advances to customers for                                   
  use in Hong Kong
                                                                     
Industrial, commercial and                                        
  financial sectors
Property development                 18,910         15,230         16,508 
Property investment                  27,422         22,885         23,231 
Financial concerns                    4,025          3,364          3,715 
Stockbrokers                            153            261            340 
Wholesale and retail trade            4,301          4,865          4,504 
Manufacturing                         1,983          1,967          1,890 
Transport and transport               
  equipment                           8,640          7,935          8,411
Others                               16,937         18,528         17,443 
                                        
                                     82,371         75,035         76,042 
                                                                        
Individuals                                                       
Advances for the purchase of                                      
  flats under the
  Government Home Ownership                                   
  Scheme, Private Sector                                    
  Participation Scheme and
  Tenants Purchase Scheme            34,852        32,252          31,936 
Advances for the purchase of                                      
  other residential
  properties                         76,379        73,548          73,854 
Credit card advances                  4,086         3,492           3,835 
Others                                5,312         4,475           4,514 
                                    120,629       113,767         114,139 
Total gross advances for use       
  in Hong Kong                      203,000       188,802         190,181     
        
Trade finance                         9,794         9,702           8,787 
Gross advances for use        
  outside Hong Kong                   3,396         3,539           3,276
Gross advances to customers         216,190       202,043         202,244 
                                      
Lending to the industrial, commercial and financial sectors grew
by HK$6,329 million, or 8.3 per cent, during the first half of
2000. Growth was recorded in most sectors, in particular
property development and property investment, reflecting the
financing needs of large property developers. During the period,
Hang Seng participated actively in the corporate loan market
while much attention was also paid on growing the small and
medium enterprises segment.

Advances to individuals rose by HK$6,490 million, or 5.7 per
cent. Residential mortgages and Government Home Ownership Scheme
mortgages continued to expand amidst intense price competition.
Credit card and other personal advances also showed satisfactory
growth as consumer sentiment improved. Trade finance rose by
HK$1,007 million, or 11.5 per cent, benefiting from the strong
performance in external trade.

Long-term investments

                                          Carrying Value         
Figures in HK$m              At 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                                                                            
Debt securities held to maturity                                  
Issued by public bodies                                           
- Central governments and            
  central banks                       2,091          1,938          2,720
- Other public sector entities        4,293          4,658          6,055 
                                      6,384          6,596          8,775 
Issued by other bodies                                           
- Banks and other financial          
  institutions                       13,063          9,754          9,753
Corporate entities                    5,064          3,832          3,868 
                                     18,127         13,586         13,621 
                                     24,511         20,182         22,396 
                                       
Equity investments                                               
Issued by corporate entities          3,844          4,078          4,921 
                                     28,355         24,260         27,317 
                                                                    
Debt securities held to maturity                                 
- Listed in Hong Kong                   441            257            703 
- Listed outside Hong Kong            1,596          1,856          2,062 
                                      2,037          2,113          2,765 
- Unlisted                           22,474         18,069         19,631 
                                     24,511         20,182         22,396 
                                       
Equity investments                                               
- Listed in Hong Kong                 3,608          3,924          4,766 
- Listed outside Hong Kong               84             94             85 
                                      3,692          4,018          4,851 
- Unlisted                              152             60             70 
                                      3,844          4,078          4,921 
                                     28,355         24,260         27,317 
                                       
Debt securities held to maturity 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.

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

                                            Fair Value           
Figures in HK$m              At 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                     
Debt securities held to maturity                                  
Issued by public bodies                                           
- Central governments and             
  central banks                       2,080          1,941          2,712
- Other public sector entities        4,292          4,672          6,057 
                                      6,372          6,613          8,769 
Issued by other bodies                                           
- Banks and other financial                         
  institutions                       13,060          9,736          9,735
- Corporate entities                  5,045          3,814          3,841 
                                     18,105         13,550         13,576
                                     24,477         20,163         22,345 
                                                                 
Debt securities held to maturity                                 
- Listed in Hong Kong                   445            256            707 
- Listed outside Hong Kong            1,593          1,853          2,057 
                                      2,038          2,109          2,764 
- Unlisted                           22,439         18,054         19,581 
                                     24,477         20,163         22,345 
                                        
Other assets

Figures in HK$m              At 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                              
Unrealised gains on off-balance                                     
  sheet interest rate,
  exchange rate and other                                     
  derivative contracts which
  are marked to market                  978            796          1,270 
Items in the course of collection                                   
  from other banks                    3,304          3,364          4,017 
Prepayments and accrued income        2,868          2,850          3,094 
Other accounts                          848          1,104            809 
                                      7,998          8,114          9,190 

Current, savings and other deposit accounts


Figures in HK$m              At 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                                                                        
Customer accounts                   392,477        353,090        364,038 
Certificates of deposit in issue     19,064         11,861         11,673 
                                    411,541        364,951         375,711 
                                      
Current, savings and other deposit accounts rose by HK$35.8
billion, or 9.5 per cent, to HK$411.5 billion, compared with
HK$375.7 billion at 31 December 1999. The growth in customer
accounts was mainly in US and Hong Kong dollar deposits, with
the faster growth being in US dollar deposits as the interest
rate differential between the two currencies diminished. Hong
Kong dollar savings deposits increased in all periods until the
second quarter of 2000 as funds were transferred to time
deposits in order to benefit from higher interest yield.

Certificates of deposit in issue expanded by HK$7.4 billion, or
63.3 per cent, to HK$19.1 billion in the first half of 2000 to
secure longer-term funding.

Shareholders' funds

Figures in HK$m                At 30 Jun 2000 At 30 Jun 1999  At 31Dec 1999
                        
Share capital                         9,559          9,559          9,559 
Retained profits                     19,154         26,252         17,729
Long-term equity investment           
  revaluation reserve                 2,893          3,098          3,959
Premises and investment properties                                  
  revaluation reserves                8,173          8,379          8,228 
Capital redemption reserve               99             99             99 
Reserves                             30,319         37,828         30,015 
Shareholders' funds                  39,878         47,387         39,574 
                                                                  
Return on average shareholders'      
  funds                               25.3%           18.0%          17.3%
                                                                  

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

Shareholders' funds grew by HK$304 million to HK$39,878 million
at 30 June 2000, mainly from the retained profits of HK$1,425
million for the first half of 2000. The long-term equity
investment revaluation reserve decreased by HK$1,066 million,
due to the realisation on disposals and the fall in fair value
of locally-listed equities at 30 June 2000.

The return on average shareholders' funds for the first half of
2000 was 25.3 per cent, compared with 18.0 per cent for the same
period last year. This substantial improvement was due to the
growth in attributable profit and the reduction in average
shareholders' funds following the dividend distributions for the
second half of 1999.

Capital resources management

Analysis of capital base and risk-weighted assets

Figures in HK$m              At 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                        
Capital base                                                      
Tier 1 capital                                                    
- Share capital                       9,559          9,559          9,559 
- Retained profits                   18,819         26,251         17,489
- Long-term equity investment            
  revaluation reserve                     -          3,098              -
- Capital redemption reserve             99             99             99 
- Total                              28,477         39,007         27,147 
                                          
Tier 2 capital                                                      
- Premises and investment                                           
  properties
  revaluation reserves                5,748          5,865          5,786 
- Long-term equity investment         
  revaluation reserve                 1,737              -          2,266
- General loan provisions             1,463          1,442          1,440 
- Total                               8,948          7,307          9,492 
                                                                   
Unconsolidated investments and           
  other deductions                   (1,240)          (803)        (1,350)    
Total capital base after              
  deductions                         36,185         45,511         35,289
                                                                   
Risk-weighted assets                                               
On-balance sheet                    210,144        193,170        193,541 
Off-balance sheet                    11,612          6,800          9,783
Total risk-weighted assets          221,756        199,970        203,324 
Total risk-weighted assets            
  adjusted for market risk          222,041        200,335        204,141
                                                                      
Capital adequacy ratios                                             
After adjusting for market risk                                     
- Tier 1^                              12.8%          19.5%          13.3%
- Total ^                              16.3%          22.7%          17.3%
                                                                    
Before adjusting for market risk                                    
- Tier 1                               12.8%          19.5%          13.4%
- Total                                16.3%          22.8%          17.4%
                                                                   
^ The capital ratios take into account market risks in
accordance with the relevant Hong Kong Monetary Authority
guideline.

The total capital ratio fell to 16.3 per cent at 30 June 2000
from 17.3 per cent at 31 December 1999. The Tier 1 capital ratio
also fell to 12.8 per cent from 13.3 per cent. The 8.8 per cent
growth in risk-weighted assets, mainly attributable to the
increase in advances to customers and interbank assets, out-
paced growth of 2.5 per cent in the capital base. This was
affected by a reduction in the long-term equity investment
revaluation reserve.

Liquidity ratio

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

                                             Half-year ended
                                30 Jun 2000    30 Jun 1999    31 Dec 1999 
                                   
The bank and its major                                             
  banking subsidiaries                 41.4%         42.3%           42.5%
                                                                  

Reconciliation of cash flow statement

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

                                                  Half-year  ended
Figures in HK$m                                30 Jun 2000    30 Jun 1999 
                                                 
Operating profit                                     5,881          4,891 
Provisions for bad and doubtful debts                   83            789 
Depreciation                                           191            185 
Amortisation of long-term investments                 (188)          (150)
Income receivable on long-term investments            (752)          (592)
Net cash inflow from trading activities              5,215          5,123 
                                                                    
Change in cash and short-term funds                 (2,635)         7,277 
Change in placings with banks repayable          
  after three months                                (4,942)       (13,844)
Change in certificates of deposit                    9,709         (2,655)
Change in securities held for           
  dealing purposes                                    (387)            27
Change in advances to customers                    (13,946)           770 
Change in amounts due from immediate                                
  holding company and
  fellow subsidiary companies                         (180)          (102)
Change in other assets                               1,165           (872)
Change in customer accounts                         28,439         11,517 
Change in certificates of deposit in issue           7,391          1,146 
Change in deposits from banks                         (326)        (1,894)
                                                                
Change in amounts due to immediate                          
  holding company and
  fellow subsidiary companies                         (959)        (1,070)
Change in other liabilities                            197          1,176 
Elimination of exchange differences          
  and other non-cash items                           1,180         (1,180)
Net cash inflow from operating activities           29,921          5,419 
             
(b)  Analysis of the changes in cash and cash equivalents during
  the period

                                                    Half-year ended  
Figures in HK$m                                30 Jun 2000    30 Jun 1999     
                                                
Balance at 1 January                               150,579        134,205 
Net cash inflow/(outflow) before the                              
  effect of foreign
  exchange movements                                23,406           (769)
Effect of foreign exchange movements                  (766)           857 
Balance at period end                              173,219        134,293 
                                                  
(c)  Analysis of the balances of cash and cash equivalents

Figures in HK$m                             At 30 Jun 2000 At 30 Jun 1999  
                                                                             
Cash in hand and balances with banks                              
  and other financial institutions                   3,311          3,647 
Money at call and placings with banks                             
  maturing within one month                        108,756         94,599 
Treasury bills                                       3,975          8,220 
Placings with banks repayable between 
  one to three months                               43,453         26,758 
Certificates of deposit                             13,724          1,069 
                                                   173,219        134,293
                                                  
Contingent liabilities, commitments and derivatives

                                   Contract   Credit equivalent     Risk- 
                                     amount              amount  weighted
Figures in HK$m                                                    amount     
 

At 30 June 2000                                                  
                                                                 
Contingent liabilities:                                          
Guarantees                            2,807               2,738     1,716 
                                                                
Commitments:                                                    
Documentary credits and short-                                  
  term trade-
  related transactions                6,055               1,213     1,210 
Undrawn formal standby                                          
  facilities,
  credit lines and other                                        
  commitments to
  lend:                                                         
- Under one year                     57,574                  -          - 
- One year and over                  17,175              8,588      8,200 
                                     80,804              9,801      9,410 
                                                                
Exchange rate contracts:                                        
Spot and forward                               
  foreign exchange                  154,224              1,896        416     
            
Other exchange rate contracts         2,405                 99         32 
                                    156,629              1,995        448 
                                                                      
Interest rate contracts:                                        
Interest rate swaps                  24,632                150         37 
Other interest rate contracts        21,887                  -          - 
                                     46,519                150         37 
                                                                
Other derivative contracts                -                  -          - 

                                   Contract   Credit equivalant     Risk- 
                                     amount              amount  weighted
Figures in HK$m                                                    amount 
                                                                 
At 30 June 1999                                                  
                                                                 
Contingent liabilities:                                          
Guarantees                            2,170              2,086      1,081 
                                                                
Commitments:                                                    
Documentary credits and short-                                  
  term trade-related
  transactions                        5,128              1,031      1,026 
Undrawn formal standby                                          
  facilities, credit
  lines and other                                        
  commitments to
  lend:                                                         
- Under one year                     54,217                  -          - 
- One year and over                   8,694              4,347      4,347 
                                     68,039              5,378      5,373 
                                                                
Exchange rate contracts:                                        
Spot and forward foreign       
  exchange                          112,132              1,633        359
Other exchange rate contracts           984                  7          1 
                                    113,116              1,640        360 
                                                                
Interest rate contracts:                                        
Interest rate swaps                  20,591                163         34 
Other interest rate contracts        10,005                  2          1 
                                     30,596                165         35 
                                                                    
Other derivative contracts              323                 20         10 

                                   Contract   Credit equivalent     Risk- 
                                     amount              amount  weighted
Figures in HK$m                                                    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 
                                                                    
Other derivative contracts                -                   -         - 

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 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                        
Replacement cost                                                  
Exchange rate contracts                 868            806          1,487 
Interest rate contracts                  76            117            127 
Other derivative contracts                -              -              - 
                                        944            923          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.

                                                 Half-year ended 
                                30 Jun 2000    30 Jun 1999    31 Dec 1999 
                                HK$m      %    HK$m      %    HK$m      % 
                                                                        
Profit on ordinary                                                     
  activities before tax
Hong Kong                      5,765     94   4,788     95   4,790    101 
Americas                         338      6     254      5     302      6 
Other                              1      -       2      -    (352)    (7)
                               6,104    100   5,044    100   4,740    100 
                                                                       
                             At 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                              HK$m        %   HK$m       %   HK$m       %     
                                                        
Total assets                                                           
Hong Kong                    417,652     88   378,333   87   384,524   87 
Americas                      53,563     11    51,219   12    52,388   12 
Other                          5,777      1     5,902    1     5,158    1 
                             476,992    100   435,454  100   442,070  100   
                                                                           
Net assets                                                             
Hong Kong                     39,806    100    44,332   94    39,836  101 
Americas                         383      1     3,095    7        44    - 
Other                           (311)    (1)      (40)  (1)     (306)  (1)
                              39,878    100    47,387  100    39,574  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. Comparative figures

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

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 (accruals 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/co-variance 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 30 June 2000 was HK$201 million, compared with
HK$199 million at 31 December 1999. The average VaR for the
first half of 2000 was HK$170 million (HK$276 million for the
first half of 1999). On an individual portfolio  basis, the
values at risk at 30 June 2000 relating to the dealing portfolio
and accrual portfolio were HK$24 million (HK$18 million at 31
December 1999) and HK$203 million (HK$198 million at 31 December
1999) respectively.

The average daily revenue earned from market risk-related
treasury activities for the first half of 2000, including
accrual book net interest income and funding costs related to
dealing positions, was HK$6 million (HK$8 million for the first
half of 1999). Out of 122 trading days for the first half of
2000, a loss was recorded on only one day and the amount of loss
was HK$0.02 million. 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 the banking businesses. 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$7 million at
30 June 2000 (HK$18 million at 31 December 1999) and the average
amount for the first half of 2000 was HK$12 million (HK$8
million for the first half of 1999). The average one-day
foreign exchange profit for the first half of 2000 was  HK$2
million (HK$2 million for the first half of 1999).

Interest rate risk arises in both the treasury dealing
portfolios 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$201 million at 30
June 2000 (HK$198 million at 31 December 1999) and the average
amount for the first half of 2000 was HK$169 million (HK$276
million for the first half of 1999). The average daily revenue
earned from treasury-related interest rate activities for the
first half of 2000 was HK$4 million (HK$6 million for the first
half of 1999).

4. Material related party transactions

(a) Immediate holding company and fellow subsidiary companies

During the period, 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 the automated teller machines 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 period, 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 period are
as follows:

Income and expenses for the period
                                            Half-year ended
Figures in HK$m                 30 Jun 2000    30 Jun 1999    31 Dec 1999 
                                  
Interest income                         334            333            338 
Interest expense                         41             25             36 
Operating expenses                      233            226            244 

Balance at the end of period                                        
Figures in HK$m              At 30 Jun 2000 At 30 Jun 1999 At 31 Dec 1999
                   
Total amount due from                10,129         10,900         12,154 
Total amount due to                   1,822          1,191          2,781 
Total contract sum of off-                                          
  balance sheet transactions         24,131         17,743         23,531 


(b) Associated companies

Hang Seng maintains an interest-free shareholders' loan to an
associated company. The balance at 30 June 2000 was HK$208
million (31 December 1999 and 30 June 1999: HK$208 million).
Hang Seng acts as agent for the marketing of life insurance
products for an associated company. Total agency commissions
received during the first half of 2000 amounted to HK$66 million
(half-year ended 30 June 1999: HK$21 million; half-year ended 31
December 1999: HK$33 million).

(c) Ultimate holding company

During the period ended 30 June 2000, no transaction was
conducted with the bank's ultimate holding company (nil for the
year 1999).

(d) Key management personnel

During the period ended 30 June 2000, no material transaction
was conducted with key management personnel of Hang Seng and its
holding companies and parties related to them (nil for the year
1999).

5. Statutory accounts

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

Certain financial information in this news release is extracted
from the statutory accounts for the year ended 31 December 1999,
which have been delivered to the Registrar of Companies and the
Hong Kong Monetary Authority. The auditors expressed an
unqualified opinion on those statutory accounts in their report
dated 28 February 2000. The Annual Report and Accounts for the
year ended 31 December 1999, which includes the statutory
accounts, can be obtained on request from the Company Secretary
Department, Level 10, 83 Des Voeux Road Central, Hong Kong; or
from Hang Seng Bank's website www.hangseng.com.

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 has been prepared in accordance with Hong Kong
Statement of Standard Accounting Practice 25 'Interim Financial
Reporting'. It also complies with the 'Recommendations on
Interim Financial Disclosure by Authorised Institutions
Incorporated in Hong Kong' issued by the Hong Kong Monetary
Authority on 30 June 2000.

8. Register of shareholders

The Register of Shareholders of Hang Seng Bank will be closed on
Wednesday, 23 August 2000 and Thursday, 24 August 2000, during
which period no transfer of shares can be registered. In order
to qualify for the first 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, 22 August 2000. The first interim
dividend will be payable on Thursday, 31 August 2000 to
shareholders on the Register of Shareholders of the bank on
Thursday, 24 August 2000.

9. News release

Copies of the interim results announcement may be obtained from
the Company Secretary Department, Level 10, 83 Des Voeux Road
Central, Hong Kong; or from Hang Seng Bank's website
www.hangseng.com. The 2000 Interim Report will be sent to
shareholders in mid-August 2000.