1/4: HSBC Holdings 1H03 (2/2)

HSBC Holdings PLC
04 August 2003

Additional Information

1. Accounting policies


The accounting policies adopted are consistent with those described in the 2002
Annual Report and Accounts.

2. Dividend


The Directors have declared a first interim dividend for 2003 of US$0.24 per
ordinary share, an increase of 17 per cent. The dividend will be payable on 7
October 2003 to shareholders on the Register at the close of business on 22
August 2003. The dividend will be payable in cash, in US dollars, sterling or
Hong Kong dollars, or a combination of these currencies, at the exchange rates
on 29 September 2003, with a scrip dividend alternative. Particulars of these
arrangements will be mailed to shareholders on or about 3 September 2003, and
elections will be required to be made by 24 September 2003.

The dividend payable in cash on shares held through Euroclear France, the
settlement and central depositary system for Euronext Paris, will be converted
into euros at the exchange rate on 29 September 2003 and paid on 7 October 2003
through CCF, HSBC's paying agent.

The dividend payable to holders of American Depositary Shares ('ADSs'), each of
which represents five ordinary shares, will be paid in cash in US dollars or as
a scrip dividend of new ADSs on 7 October 2003 or invested in additional ADSs
for participants in the dividend reinvestment plan operated by the depositary.

The Company's shares will be quoted ex-dividend in London and in Hong Kong on 20
August 2003 and in Paris on 25 August 2003. The ADSs will be quoted ex-dividend
in New York on 20 August 2003.

3. Earnings and dividends per share
                                                      Half-year to           Half-year to          Half-year to
Figures in US$                                             30Jun03                30Jun02               31Dec02
Cash earnings per share                                       0.48                   0.40                  0.36
Basic earnings per share                                      0.41                   0.35                  0.32
Diluted earnings per share                                    0.40                   0.35                  0.31
Dividend per share                                            0.24                  0.205                 0.325
Dividend pay out ratio ^                                        50 %                   51 %                  90 %


^ Dividends per share expressed as a percentage of cash earnings per share.

Basic earnings per ordinary share was calculated by dividing the earnings of
US$4,106 million by the weighted average number of ordinary shares outstanding,
excluding own shares held, of 10,066 million (first half of 2002: earnings of
US$3,280 million and 9,298 million shares; second half of 2002: earnings of
US$2,959 million and 9,380 million shares).

Diluted earnings per share was calculated by dividing the basic earnings, which
require no adjustment for the effects of dilutive ordinary potential shares, by
the weighted average number of ordinary shares outstanding, excluding own shares
held, plus the weighted average number of ordinary shares that would be issued
on conversion of all the dilutive potential ordinary shares (being share options
outstanding not yet exercised) of 10,161 million (first half of 2002: 9,404
million shares; second half of 2002: 9,469 million shares).

The cash earnings per share was calculated by dividing the basic earnings,
including the add-back of amortised goodwill, by the weighted average number of
ordinary shares outstanding.

4. Taxation
                                                           Half-year           Half-year                  Half-year
Figures in US$m                                           to 30Jun03          to 30Jun02                 to 31Dec02

UK corporation tax charge                                        225                 322                      362

Overseas taxation                                              1,219                 736                      481
Joint ventures                                                     -                  (6)                       -
Associates                                                         8                  19                       (2)

Current taxation                                               1,452               1,071                      841

Deferred taxation                                                102                 244                      378

Total charge for taxation                                      1,554               1,315                    1,219

Effective tax rate                                             25.4%                26.0 %                   26.5 %

HSBC Holdings and its subsidiary undertakings in the United Kingdom provided for
UK corporation tax at 30 per cent, the rate for the calendar year 2003 (2002: 30
per cent). Overseas tax included Hong Kong profits tax of US$250 million (first
half 2002: US$253 million; second half 2002: US$155 million) provided at the
rate of 17.5 per cent (2002: 16.0 per cent) on the profits assessable in Hong
Kong. Other overseas taxation was provided for in the countries of operation at
the appropriate rates of taxation.

At 30 June 2003, there were in total potential future tax benefits of
approximately US$1,086 million (30 June 2002: US$842 million; 31 December 2002:
US$885 million) in respect of trading losses, expenditure charged to the profit
and loss account but not yet allowed for tax, and capital losses, against which
a 100 per cent valuation allowance has been taken, as recoverability of these
assets is currently considered remote. Should circumstances change then the
treatment of these assets would be reviewed.

Analysis of overall tax charge:
                                                         Half-year             Half-year                  Half-year
Figures in US$m                                         to 30Jun03            to 30Jun02                 to 31Dec02

Taxation at UK corporate tax rate of 30%                     1,834                 1,517                     1,378
Impact of differently taxed overseas profits
 in principal locations                                       (196)                 (241)                     (231)
Tax-free gains                                                 (15)                  (48)                       29
Argentine losses (relieved)/unrelieved                          (7)                   18                        69
Goodwill amortisation                                          238                   128                       133
Acquisition accounting adjustments                            (115)                    -                         -
Prior period adjustments                                      (113)                   (7)                      (83)
Other items                                                    (72)                  (52)                      (76)
Overall tax charge                                           1,554                 1,315                     1,219
Timing differences subject to deferred tax                    (102)                 (244)                     (378)
Current tax charge                                           1,452                 1,071                       841

The acquisition accounting adjustments arise because certain assets and
liabilities were revalued on the Household and GFBital acquisitions. The
difference between the 'fair value' of assets and liabilities, which is included
in the accounts, and the book value is amortised to the profit and loss account
over the life of the assets and liabilities. This amortisation resulted in a
positive impact on the profit and loss account. There is no tax associated with
this adjustment to net income and so it reduces the effective tax rate.

5. Subordinated liabilities
                                                                 At                   At                       At
Figures in US$m                                             30Jun03              30Jun02                  31Dec02

Dated subordinated loan capital which is
 repayable:
- within 1 year                                                 615                1,651                      956
- between 1 and 2 years                                       1,024                  652                      862
- between 2 and 5 years                                       2,070                2,056                    1,957
- over 5 years                                               13,480                7,840                   11,056
                                                             17,189               12,199                   14,831

6. Assets charged as security for liabilities

HSBC has pledged assets as security for liabilities included under the following headings:

                                                                      Amount of liability secured
                                                               At                   At                        At
Figures in US$m                                           30Jun03              30Jun02                   31Dec02

Deposits by banks                                           4,080                1,386                     1,661
Customer accounts                                           8,148                5,510                     4,204
Debt securities in issue                                   30,228                1,718                     1,437
Other liabilities                                           3,851                3,619                     2,884
                                                           46,307               12,233                    10,186


The amount of assets pledged to secure these liabilities are included under the following headings:

                                                                       Amount of assets pledged
                                                               At                   At                        At
Figures in US$m                                           30Jun03              30Jun02                   31Dec02

Treasury bills and other eligible securities                2,041                1,513                     1,673
Loans and advances to customers                            37,922                3,114                     2,514
Debt securities                                            42,464               34,740                    39,126
Other                                                       2,461                1,478                     1,144
                                                           84,888               40,845                    44,457

7. Capital resources
                                                                   At                       At                      At
                                                              30Jun03                  30Jun02                 31Dec02
Capital ratios (%)

Total capital ratio                                              11.7                     13.5                    13.3
Tier 1 capital ratio                                              8.5                      9.7                     9.0

Composition of capital

Figures in US$m

Tier 1:
 Shareholders' funds                                           70,290                   51,178                  52,406
 Minority interests                                             3,521                    3,434                   3,306
 Innovative tier 1 securities                                   4,964                    3,570                   3,647
 Less: property revaluation reserves                           (1,707)                  (2,292)                 (1,954)
       : goodwill capitalised and intangible
         assets                                               (28,007)                 (15,587)                (17,855)
       : own shares held ^                                       (801)                    (576)                   (601)
Total qualifying tier 1 capital                                48,260                   39,727                  38,949
Tier 2:
 Property revaluation reserves                                  1,707                    2,292                   1,954
 General provisions                                             2,816                    2,085                   2,348
 Perpetual subordinated debt                                    3,543                    3,514                   3,542
 Term subordinated debt                                        14,885                    9,882                  12,875
 Minority interests in tier 2 capital                             556                      793                     775
Total qualifying tier 2 capital                                23,507                   18,566                  21,494

Unconsolidated investments                                     (3,703)                  (2,031)                 (2,231)
Investments in other banks                                       (662)                    (696)                   (638)
Other deductions                                                 (521)                    (126)                   (144)
Total capital                                                  66,881                   55,440                  57,430

Total risk-weighted assets                                    569,613                  410,986                 430,551

The above figures were computed in accordance with the EU Banking Consolidation
Directive.

^ This principally reflects shares held in trust to fulfil the Group's
obligations under employee share option plans.

8. Foreign exchange exposure

The Group's foreign exchange exposure comprises trading exposures and structural
foreign currency translation exposure. Foreign exchange trading exposures
comprise those which arise from foreign exchange dealing within Treasury and
currency exposures originated by commercial banking businesses in HSBC. The
latter are transferred to local treasury units where they are managed, together
with exposures which result from dealing activities, within limits approved by
the Group Executive Committee.

The Group's structural foreign currency translation exposures are represented by
the net asset value of the holding company's foreign currency equity and
subordinated debt investments in its subsidiaries, branches and associated
undertakings. Gains or losses on structural foreign currency exposures are taken
to reserves. The Group's structural foreign currency exposures are managed with
the primary objective of ensuring, where practical, that the Group's and
individual banking subsidiaries' tier 1 capital ratios are protected from the
effect of changes in exchange rates.

9. Contingent liabilities and commitments

The total contract amounts of contingent liabilities and commitments which, at
30 June 2003, were US$450,233 million (30 June 2002: US$255,130 million; 31
December 2002: US$276,884 million) are credit-related instruments which include
acceptances, letters of credit, guarantees and commitments to extend credit. The
contractual amounts represent the amounts at risk should the contract be fully
drawn upon and the client default. Since a significant portion of guarantees and
commitments are expected to expire without being drawn upon, the total of the
contract amounts is not representative of future liquidity requirements.

10. Reconciliation of operating profit to net cash flow from operating activities

                                                              Half-year            Half-year                 Half-year
Figures in US$m                                              to 30Jun03           to 30Jun02                to 31Dec02

Operating profit                                                  5,895                4,659                     4,376
Change in prepayments and accrued income                         (2,450)                 156                       199
Change in accruals and deferred income                            1,682                  447                      (257)
Interest on finance leases and similar
 hire purchase contracts                                             20                   15                        21
Interest on subordinated loan capital                               479                  445                       417
Depreciation and amortisation                                     1,298                  941                     1,103
Amortisation of discounts and premiums                              254                    9                       (17)
Provisions for bad and doubtful debts                             2,374                  715                       606
Loans written off net of recoveries                              (2,834)                (888)                   (1,043)
Provisions for liabilities and charges                              591                  462                       417
Provisions utilised                                                (457)                (948)                     (383)
Amounts written off fixed asset investments                          60                  139                       185

Net cash inflow from trading activities                           6,912                6,152                     5,624

Change in items in the course of collection
 from other banks                                                (2,215)                (119)                      243
Change in treasury bills and other eligible bills                  (118)                 460                       255
Change in loans and advances to banks                           (14,353)              11,320                     5,230
Change in loans and advances to customers                       (52,514)             (32,940)                   (2,392)
Change in other securities                                       (6,335)              (7,523)                   10,066
Change in other assets                                             (881)              (5,947)                   (1,108)
Change in deposits by banks                                      20,923                7,806                   (11,311)
Change in customer accounts                                      51,214               20,505                    10,656
Change in items in the course of
 transmission to other banks                                      1,331                  314                       402
Change in debt securities in issue                                6,201                1,585                     1,350
Change in other liabilities                                       7,248               14,092                   (15,672)
Elimination of exchange differences ^                            (3,022)              (2,757)                      135

Net cash inflow from operating activities                        14,391               12,948                     3,478

^ Adjustment to bring changes between opening and closing balance sheet
amounts to average rates. This is not done on a line-by-line basis, as it cannot
be determined without unreasonable expense.

11. Profit and loss account impact from Household for the half-year to 30 June
2003
                                              30Jun03        30Jun03          30Jun03        30Jun02          31Dec02
                                                Total      Household     Rest of HSBC
                                                 US$m           US$m             US$m           US$m             US$m
Interest receivable                            18,206          3,492           14,714         14,229           14,366
Interest payable                               (6,985)          (702)          (6,283)        (6,636)          (6,499)
Net interest income                            11,221          2,790            8,431          7,593            7,867
Other operating income                          7,286            612            6,674          5,510            5,625
Operating income                               18,507          3,402           15,105         13,103           13,492
Operating expenses excluding goodwill          (9,490)        (1,214)          (8,276)        (7,146)          (7,808)
Goodwill amortisation                            (632)          (115)            (517)          (396)            (458)
Operating profit before provisions              8,385          2,073            6,312          5,561            5,226
Provisions for bad and doubtful debts          (2,374)        (1,539)            (835)          (715)            (606)
Provisions for contingent liabilities
 and commitments                                  (22)             -              (22)            (3)             (36)
Loss from foreign currency
 redenomination in Argentina                      (34)             -              (34)           (45)             (23)
Amounts written off fixed
 asset investments                                (60)             -              (60)          (139)            (185)
Operating profit                                5,895            534            5,361          4,659            4,376
Share of operating loss in joint                 (124)             -             (124)           (23)              (5)
ventures
Share of operating profit in                       92              -               92             71               64
associates
Gains/(losses) on disposal of:
- investments                                     264              2              262            351              181
- tangible fixed assets                           (15)             -              (15)            (1)             (23)
Profit on ordinary activities before
 tax                                            6,112            536            5,576          5,057            4,593
Tax on profit on ordinary activities           (1,554)          (133)          (1,421)        (1,315)          (1,219)
Profit on ordinary activities after
 tax                                            4,558            403            4,155          3,742            3,374
Minority interests:
- equity                                         (261)             -             (261)          (278)            (227)
- non-equity                                     (191)             -             (191)          (184)            (188)
Profit attributable to shareholders             4,106            403            3,703          3,280            2,959
Dividends                                      (2,589)             -           (2,589)        (1,929)          (3,072)
Retained profit/(deficit) for the
 period                                         1,517            403            1,114          1,351             (113)

12. Registers of shareholders - First interim dividend for 2003

The Overseas Branch Register of shareholders in Hong Kong will be closed for one
day, on Friday 22 August 2003. Any person who has acquired shares registered on
the Hong Kong Branch Register but who has not lodged the share transfer with the
Branch Registrar should do so before 4.00pm on Thursday 21 August 2003 in order
to receive the dividend.

Any person who has acquired shares registered on the Principal Register in the
United Kingdom but who has not lodged the share transfer with the Principal
Registrar should do so before 4.00pm on Friday 22 August 2003 in order to
receive the dividend. Transfers between the Principal Register and the Branch
Register may not be made while the Branch Register is closed.

Similarly, transfers of American Depositary Shares must be lodged with the
depositary by noon on Friday 22 August 2003 in order to receive the dividend.

13. Proposed second interim dividend for 2003

The Directors intend to declare a second interim dividend for 2003 of US$0.12
per ordinary share. The proposed timetable for the dividend is:

Announcement of second interim dividend for 2003                10 November 2003

Shares quoted ex-dividend in London and Hong Kong and
American Depositary Shares (ADSs) quoted ex-dividend
in New York                                                     26 November 2003

Record date for second interim dividend for 2003                28 November 2003

Closure of Hong Kong Overseas Branch Register of shareholders   28 November 2003

Shares quoted ex-dividend in Paris                               1 December 2003

Mailing of dividend documentation                                9 December 2003

Final date for receipt by registrars of forms of election and  
revocations of standing instructions for scrip dividends          7 January 2004

Exchange rate determined for payment of dividends in
sterling and Hong Kong dollars                                   12 January 2004

Payment date: dividend warrants, new share certificates and
notional tax vouchers mailed and shares credited to stock
accounts in CREST                                                20 January 2004

14. Foreign currency amounts

The sterling and Hong Kong dollar equivalent figures in the consolidated profit
and loss account and balance sheet are for information only. These are
translated at the average rate for the period for the profit and loss account
and the closing rate for the balance sheet as follows:

Period-end                                     30Jun03                  30Jun02                31Dec02

Closing : HK$/US$                                7.798                    7.800                  7.798

        : £/US$                                  0.605                    0.654                  0.620

Average : HK$/US$                                7.799                    7.799                  7.799 ^

        : £/US$                                  0.621                    0.693                  0.641 ^

^ Average for the second half of 2002.

15. Litigation

HSBC, through a number of its subsidiary undertakings, is named in and is
defending legal actions in various jurisdictions arising from its normal
business. None of these proceedings is regarded as material litigation.

16. Notifiable interests in share capital

According to the register maintained under section 211 of the Companies Act
1985, Legal and General Investment Management Limited notified the Company on 11
June 2002 that it had an interest in 284,604,788 HSBC Holdings ordinary shares,
representing 3.01 per cent of the ordinary shares in issue at that date.

No notifiable interest, being 5 per cent or more, in the equity share capital is
recorded in the register maintained under Section 336 of the Securities and
Futures Ordinance of Hong Kong.

17. Dealings in HSBC Holdings shares

On 8 May 2003 HSBC Life (International) Limited sold 20,902 HSBC Holdings
ordinary shares of US$0.50 each on the London Stock Exchange at 708.26 pence per
share.

Save for this and dealings by HSBC Bank plc, trading as an intermediary in the
Company's shares in London, neither the Company nor any subsidiary undertaking
has bought, sold or redeemed any securities of the Company during the six months
ended 30 June 2003.

18. Interim Report and Statutory accounts

The information in this news release does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985 (the Act). The 2003
Interim Report was approved by the Board of Directors on 4 August 2003. The
statutory accounts for the year ended 31 December 2002 have been delivered to
the Registrar of Companies in England and Wales in accordance with Section 242
of the Act and filed with the US Securities and Exchange Commission. The auditor
has reported on those accounts. Its report was unqualified and did not contain a
statement under Section 237(2) or (3) of the Act. This news release does not
constitute the unaudited interim consolidated financial statements which are
contained in the Interim Report. The unaudited interim consolidated financial
statements have been reviewed by the Company's auditor, KPMG Audit Plc, in
accordance with the guidance contained in Bulletin 1999/4: Review of interim
financial information issued by the Auditing Practices Board. On the basis of
its review it was not aware of any material modifications that should be made to
the unaudited interim consolidated financial statements as presented for the six
months ended 30 June 2002 in the Interim Report. The full report of its review
is included in the Interim Report to the shareholders.

19. Forward-looking statements

This news release contains certain forward-looking statements with respect to
the financial condition, results of operations and business of the Group. These
forward-looking statements represent the Group's expectations or beliefs
concerning future events and involve known and unknown risks and uncertainty
that could cause actual results, performance or events to differ materially from
those expressed or implied in such statements. Certain statements, such as those
that include the words 'potential', 'estimated', and similar expressions or
variations on such expressions may be considered 'forward-looking statements'.

20. Corporate Governance

HSBC is committed to high standards of corporate governance. HSBC Holdings has
complied throughout the six months to 30 June 2003 with the best practice
provisions of the Combined Code on corporate governance appended to the Listing
Rules of the Financial Services Authority and with the provisions of Appendix 14
to the Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong.

There have been no material changes to the information disclosed in the 2002
Annual Report and Accounts in respect of the remuneration of employees,
remuneration policies and share option plans. On 28 March 2003 the Company
acquired Household International, Inc. which has approximately 34,500 employees.
The terms of the employment agreement with W F Aldinger, Chairman and Chief
Executive Officer of Household, particulars of which were set out in the
Disclosable Transaction Circular dated 26 February 2003, came into effect on 28
March 2003.

21. Interim Report

Copies of the Interim Report will be sent to registered shareholders on or about
15 August 2003 and may be obtained from Group Corporate Affairs, HSBC Holdings
plc, 8 Canada Square, London E14 5HQ, United Kingdom; or from Group Public
Affairs, The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road
Central, Hong Kong; or from HSBC Bank USA, 452 Fifth Avenue, New York, New York
10018, USA; or from Direction de la Communication, CCF, 103 avenue des Champs
Elysees, 75419, Paris Cedex 08, France. The Interim Report will also be
available on the HSBC website www.hsbc.com and on The Stock Exchange of Hong
Kong's website www.hkex.com.hk.

A Chinese translation of the report may be obtained on request from
Computershare Hong Kong Investor Services Limited, Rooms 1901-5, Hopewell
Centre, 183 Queen's Road East, Hong Kong.

Custodians or nominees that wish to distribute copies of the Interim Report to
their clients may request copies for collection by writing to Group Corporate
Affairs at the addresses given above.

22. Final results and third interim dividend for 2003

The results for the year to 31 December 2003 will be announced on Monday 1 March
2004. It is intended that any third interim dividend for 2003 that is announced
on that date would be payable on 5 May 2004 to shareholders on the Register on
19 March 2004. HSBC's shares would be quoted ex-dividend in London and in Hong
Kong on 17 March 2004 and in Paris on 22 March 2004. The American Depositary
Shares would be quoted ex-dividend in New York on 17 March 2004.

23. News release

Copies of this news release may be obtained from Group Corporate Affairs, HSBC
Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; The Hongkong and
Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; HSBC
Bank USA, 452 Fifth Avenue, New York, New York 10018, USA. The news release will
also be available on the HSBC website www.hsbc.com.

Within this document, the Hong Kong Special Administrative Region of the
People's Republic of China has been referred to as 'Hong Kong'.


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