HSBC Canada Interim Results

HSBC Holdings PLC
22 July 2002

                                HSBC BANK CANADA

                       2002 INTERIM RESULTS - HIGHLIGHTS

* Net income was C$117 million for the half-year ended 30 June 2002, an increase
of 10.4 per cent over the same period in 2001.

* Net income was C$41 million for the quarter ended 30 June 2002, a decrease of
19.6 per cent over the second quarter of 2001.

* Return on average common equity was 14.8 per cent for the six months ended 30
June 2002 and 10.1 per cent for the quarter ended 30 June 2002.

* The cost:income ratio (excluding amortisation of goodwill and intangible
assets) was 58.1 per cent for the half-year ended 30 June 2002 and 64.2 per cent
for the quarter ended 30 June 2002.

* Total assets of C$35.1 billion at 30 June 2002 compared to C$30.8 billion at
30 June 2001.

* Total assets under administration were C$15.4 billion at 30 June 2002, of
which C$11.0 billion were funds under management and C$4.4 billion were custody
and administration accounts.

Financial Commentary

HSBC Bank Canada recorded net income of C$117 million for the six months ended
30 June 2002, an increase of C$11 million, or 10.4 per cent, from C$106 million
for the six months ended 30 June 2001. Net income for the quarter ended 30 June
2002 was C$41 million compared to C$51 million for the second quarter of 2001, a
decrease of 19.6 per cent. The decrease largely resulted from a one-off
restructuring cost of C$28 million as a result of the withdrawal from
institutional equity sales, trading and research activities.

Martin Glynn, President and Chief Executive Officer, said: "Growth in net
interest income compensated for higher credit loss provisions and one-off
expenses recorded in the second quarter of 2002. While the difficult capital
market conditions during the first half of 2002 continued to have a negative
impact on our capital market revenues, fee income from personal and commercial
banking showed good growth over the prior year comparative periods.

"Provisions for credit losses rose in the quarter to cover an exposure in the
telecommunications sector. However, our underlying credit quality remains
strong, we remain prudently provisioned and our allowance for credit losses
exceeds the total of impaired loans.

"The decision to withdraw from institutional equities sales, trading and
research activities was a difficult one, but we believe that it was necessary.
We must ensure that we continue to operate in businesses that are profitable or
strategically relevant to our North American and international operations.

"The expansion of our wealth management business is a core component of HSBC's
overall growth strategy for Canada. As we continue to implement this strategy, I
am confident that we will be successful in maintaining our reputation for
outstanding customer service."

Net interest income

Net interest income for the second quarter of 2002 was C$213 million, an
increase of C$27 million, or 14.5 per cent, over the second quarter of 2001. For
the six months ended 30 June 2002 net interest income was C$424 million, an
increase of 17.5 per cent over the comparative period in 2001.

The increase in net interest income in the first half of 2002 was driven
primarily by growth in the loan portfolio, particularly residential mortgages as
the low interest rate environment had a positive impact on the housing market
across Canada, and the benefit of lower funding costs. As a result, the net
interest margin widened to 2.86 per cent for the half-year ended 30 June 2002
compared with 2.67 per cent for the similar period in 2001.

Other income

Other income was C$103 million in the second quarter of 2002 compared to C$104
million in the second quarter of 2001. For the six months ended 30 June 2002,
other income was C$213 million compared to C$206 million for the same period in
2001. The continuing weakness in the global equity markets, combined with the
restructuring of the institutional equity business during the second quarter of
2002, resulted in lower capital market fees for the first two quarters of 2002
compared to the similar periods in 2001. The increase of C$7 million in
securitisation income was due to gains arising in the first quarter of 2002.
Canadian accounting standards require gains arising after 1 July 2001 to be
recognised in the period the assets are sold, rather than deferring and
amortising the gains over the life of the assets.

Excluding capital market fees, trading revenue and securitisation income, income
from the bank's other lines of business increased 8.3 per cent for the six
months ended 30 June 2002 compared to the similar period in 2001. Commercial
credit fee income increased 24.0 per cent, primarily from increased activity in
guarantees, letters of credit and bankers acceptances. Similarly, trade finance
revenues increased 18.2 per cent due to increased volumes.

Non-interest expenses

Non-interest expenses were C$205 million in the quarter ended 30 June 2002
compared to C$172 million in the second quarter of 2001. For the six months
ended 30 June 2002, non-interest expenses were C$374 million compared to C$336
million for the same period of 2001. During the second quarter of 2002, a
restructuring charge of C$28 million was recorded relating to the withdrawal
from institutional equity trading, sales and research activities.

Salaries and employee benefits were lower due primarily to lower
performance-based compensation. Other non-interest expenses (excluding
restructuring costs) were higher for the second quarter of 2002 compared to the
second quarter of 2001 due primarily to a one-off operating loss. The increases
were offset by lower volume-driven transaction expenses resulting from the lower
capital market fees in the first half of 2002.

The cost:income ratio, excluding amortisation of goodwill and intangible assets,
for the second quarter of 2002 was 64.2 per cent (55.4 per cent excluding
restructuring costs) compared to 58.6 per cent in the second quarter of 2001.
For the six months ended 30 June 2002, the cost:income ratio, excluding
amortisation of goodwill and intangible assets, was 58.1 per cent (53.7 per cent
excluding restructuring costs) compared to 58.6 per cent for the similar period
in 2001.

Provision for income taxes

The provision for income taxes was C$23 million for the second quarter of 2002
compared to C$38 million for the same quarter in 2001. On a year-to-date basis,
the provision for income taxes was C$70 million in 2002 compared to C$79 million
in 2001. The lower effective tax rate in 2002 reflects lower tax rates in
Canada.

Credit quality and provision for credit losses

The provision for credit losses was C$43 million in the second quarter of 2002
compared to C$25 million in the second quarter of 2001. For the six months ended
30 June 2002, the provision for credit losses was C$68 million compared to C$38
million for the same period in 2001. The higher provision level in the second
quarter of this year related to an exposure in the telecommunications sector.
Excluding this, the provision for credit losses would have been in line with
recent quarters. Overall, underlying credit quality remained strong. The
allowance for credit losses was in excess of impaired loans by C$12 million at
30 June 2002.

Balance sheet

Total assets at 30 June 2002 were C$35.1 billion, up C$1.8 billion from 31
December 2001. Loans increased by C$1.2 billion due primarily to the continued
growth in residential mortgages, net of securitisations.

Total deposits increased C$1.4 billion from 31 December 2001 to 30 June 2002.
Personal deposits grew C$0.2 billion and commercial deposits increased by C$0.9
billion over the same period.

Total assets under administration

Funds under management were C$11.0 billion at 30 June 2002 compared to C$11.1
billion at 31 March 2002 and C$10.0 billion at 30 June 2001. Net new funds
invested by customers during the second quarter of 2002 offset the fall in the
equity markets over the same period. Including custody and administration
balances, total assets under administration were C$15.4 billion, an increase of
C$2.0 billion over 31 March 2002. This increase was attributed to HSBC
Securities (Canada) Inc. assuming carrying broker activities for Merrill Lynch
HSBC Canada Inc. in the second quarter of 2002.

Capital ratios

The bank's tier 1 capital ratio was 8.1 per cent and the total capital ratio was
11.1 per cent at 30 June 2002. This compares with 8.4 per cent and 11.1 per
cent, respectively, at 30 June 2001 and 8.7 per cent and 11.4 per cent at 31
March 2002. Ratios remained strong and afforded a C$150 million common share
dividend paid in the second quarter of 2002.

Dividends

A regular dividend of 39.0625 cents per share (totalling C$2 million) has been
declared on the Class 1 Preferred Shares - Series A. The dividend will be
payable in cash on 1 October 2002, the first business day after 30 September
2002 for shareholders of record on 13 September 2002.

About HSBC Bank Canada

HSBC Bank Canada (HSB.PR.A - TSX), a subsidiary of HSBC Holdings plc, has more
than 160 offices. With some 7,000 offices in 81 countries and territories and
assets of US$696 billion at 31 December 2001, the HSBC Group is one of the
world's largest banking and financial services organisations. For more
information about HSBC Bank Canada and its products and services, visit our
website at hsbc.ca.

Copies of HSBC Bank Canada's Interim Report will be sent to shareholders during
August 2002.

This document may contain forward-looking statements, including statements
regarding the business and anticipated financial performance of HSBC Bank
Canada. These statements are subject to a number of risks and uncertainties that
may cause actual results to differ materially from those contemplated by the
forward-looking statements. Some of the factors that could cause such
differences include legislative or regulatory developments, competition,
technological change, global capital market activity, changes in government
monetary and economic policies, changes in prevailing interest rates, inflation
levels and general economic conditions in geographic areas where HSBC Bank
Canada operates.

Summary
                                                          Quarter ended                          Half-year ended
Figures in C$ millions                        30Jun02          31Mar02          30Jun01          30Jun02         30Jun01
(except per share amounts)

Earnings
Net income                                         41               76               51              117             106
Basic earnings per share                         0.09             0.16             0.11             0.25            0.22

Performance ratios (%)
Return on average common equity                  10.1             19.7             14.6             14.8            15.5
Return on average assets                         0.45             0.89             0.63             0.67            0.66
Net interest margin                              2.82             2.91             2.70             2.86            2.67
Cost:income ratio ^                              64.2             52.0             58.6             58.1            58.6
Other income:total income ratio                  32.6             34.3             35.9             33.4            36.3

 ^  Excluding amortisation of goodwill and intangible assets.

Credit information
Impaired loans                                    347              282              252
Allowance for credit losses
  - Balance at end of period                      359              331              297
  - As a percentage of impaired loans             103 %            117 %            118 %
  - As a percentage of loans outstanding         1.53 %           1.45 %           1.37 %

Average balances
Assets                                         34,598           33,741           31,405           34,172          31,057
Loans                                          22,885           22,047           20,914           22,468          20,574
Deposits                                       27,738           26,712           25,119           27,228          24,867
Common equity                                   1,563            1,532            1,361            1,547           1,335

Capital ratios (%)
Tier 1                                            8.1              8.7              8.4
Total capital                                    11.1             11.4             11.1

Total assets under administration
Funds under management                         10,974           11,118            9,959
Custody and administration accounts             4,435            2,302            2,262
Total assets under administration              15,409           13,420           12,221

Consolidated Statement of Income (Unaudited)
                                                             Quarter ended                       Half-year ended
Figures in C$ millions                            30Jun02         31Mar02         30Jun01       30Jun02          30Jun01
(except per share amounts)

Interest and dividend income
Loans                                                 318             299             373           617           751
Securities                                             28              27              41            55            87
Deposits with regulated
  financial institutions                               14              18              32            32            74
Total interest income                                 360             344             446           704           912

Interest expense
Deposits                                              139             125             252           264           535
Debentures                                              8               8               8            16            16
Total interest expense                                147             133             260           280           551

Net interest income                                   213             211             186           424           361

Provision for credit losses                            43              25              25            68            38
Net interest income after
  provision for credit losses                         170             186             161           356           323

Other income
Deposit and payment service charges                    18              17              17            35            33
Credit fees                                            16              15              13            31            25
Capital market fees                                    15              20              24            35            46
Mutual fund and administration fees                    15              15              15            30            30
Foreign exchange                                       13              12              12            25            24
Trade finance                                           7               6               5            13            11
Trading revenue                                         5               2               4             7             8
Securitisation income                                   2              12               4            14             7
Other                                                  12              11              10            23            22
Total other income                                    103             110             104           213           206

Net interest and other income                         273             296             265           569           529

Non-interest expenses
Salaries and employee benefits                         83              85              87           168           171
Premises and equipment                                 27              28              30            55            59
Other                                                  67              56              55           123           106
Restructuring costs                                    28               -               -            28             -
Total non-interest expenses                           205             169             172           374           336

Income before taxes and non-controlling
  interest in income of trust                          68             127              93           195           193
Provision for income taxes                             23              47              38            70            79
Non-controlling interest in income of trust             4               4               4             8             8
Net income                                             41              76              51           117           106
Preferred share dividends                               2               2               2             4             4
Net income attributable to
  common shares                                        39              74              49           113           102

Average common shares outstanding (000's)         456,168         456,168         456,168       456,168       456,168
Basic earnings per share                             0.09            0.16            0.11          0.25          0.22

Condensed Consolidated Balance Sheet (Unaudited)
Figures in C$ millions                                      At 30Jun02              At 31Dec01            At 30Jun01

Assets
Cash and deposits with Bank of Canada                              406                     466                   349
Deposits with regulated financial institutions                   3,869                   3,261                 2,283
                                                                 4,275                   3,727                 2,632

Investment securities                                            2,211                   2,474                 2,673
Trading securities                                               1,087                   1,153                   806
                                                                 3,298                   3,627                 3,479

Assets purchased under
  Reverse repurchase agreements                                    822                     428                   192

Loans
  Businesses and government                                     11,957                  11,575                12,061
  Residential mortgage                                           9,250                   8,377                 7,487
  Consumer                                                       2,236                   2,233                 2,084
  Allowance for credit losses                                     (359 )                  (315 )                (297 )
                                                                23,084                  21,870                21,335

Customers' liability under acceptances                           2,424                   2,571                 2,048
Land, buildings and equipment                                      109                     124                   121
Other assets                                                     1,046                     913                   974
                                                                 3,579                   3,608                 3,143
Total assets                                                    35,058                  33,260                30,781

Liabilities and shareholders' equity
Deposits
  Regulated financial institutions                               2,064                   1,747                   707
  Individuals                                                   13,595                  13,390                12,587
  Businesses and governments                                    12,437                  11,570                11,382
                                                                28,096                  26,707                24,676

Subordinated debentures                                            541                     447                   439

Acceptances                                                      2,424                   2,571                 2,048
Assets sold under repurchase agreements                            289                       7                     -
Other liabilities                                                1,890                   1,686                 1,880
Non-controlling interest in trust and subsidiary                   230                     230                   230
                                                                 4,833                   4,494                 4,158
Shareholders' equity
  Preferred shares                                                 125                     125                   125
  Common shares                                                    935                     935                   935
  Contributed surplus                                              165                     165                   165
  Retained earnings                                                363                     387                   283
                                                                 1,588                   1,612                 1,508
Total liabilities and shareholders' equity                      35,058                  33,260                30,781

Condensed Consolidated Statement of Cash Flows (Unaudited)
                                                         Quarter ended                         Half-year ended
Figures in C$ millions                         30Jun02        31Mar02         30Jun01         30Jun02         30Jun01
Cash flows provided by/(used in):
  Operating activities                             246             95              82             341             323
  Financing activities                           1,326            291            (258 )         1,617           1,146
  Investing activities                            (466 )         (929 )          (286 )        (1,395 )        (1,429 )
(Increase)/decrease in cash and
  cash equivalents                               1,106           (543 )          (462 )           563              40
Cash and cash equivalents,
  beginning of period                            2,595          3,138           2,840           3,138           2,338
Cash and cash equivalents,
  end of period                                  3,701          2,595           2,378           3,701           2,378
Represented by:
  Cash resources per balance sheet               4,275          3,558           2,632
  less non-operating deposits ^                   (574 )         (963 )          (254 )
  Cash and cash equivalents,
  end of period                                  3,701          2,595           2,378

 ^  Non operating deposits are comprised primarily of cash which reprices after 90 days and cash restricted for recourse
on securitisation transactions.




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