1/5: HSBC Holdings 2002 (3/3)

HSBC Holdings PLC
03 March 2003

11. Bad and doubtful debts
Figures in US$ millions        2002 Half-year ended                               2001 Half-year ended
By category:                   30Jun              31Dec           2002          30Jun              31Dec         2001

Loans and advances
 to customers

- specific charge:
 new provisions                1,340              1,338          2,678          1,079              1,487        2,566
Releases and
 recoveries                     (502 )             (504 )       (1,006 )         (629 )             (473 )     (1,102 )
                                 838                834          1,672            450              1,014        1,464
- net general
 charge/(release):
 Argentina exposures            (114 )              (82 )         (196 )            -                600          600
 Other                            (9 )             (146 )         (155 )           (9 )              (18 )        (27 )

                                (123 )             (228 )         (351 )           (9 )              582          573
Customer bad and
 doubtful debt
 charge                          715                606          1,321            441              1,596        2,037

Total bad and
 doubtful debt
 charge                          715                606          1,321            441              1,596        2,037

12. Analysis of fees and commissions receivable and payable

                                        2002 Half-year ended                      2001 Half-year ended
Figures in US$m                          30Jun            31Dec        2002        30Jun            31Dec        2001

Account services                           802              913       1,715          814              806       1,620
Credit facilities                          366              386         752          311              317         628
Remittances                                127              141         268          121              125         246
Cards                                      577              665       1,242          537              579       1,116
Imports/Exports                            263              293         556          257              267         524
Underwriting                                96               77         173           86               49         135
Insurance                                  379              396         775          337              331         668
Mortgage servicing rights                   38               39          77           40               38          78
Trust income                                62               63         125           58               56         114
Broking income                             402              371         773          499              429         928
Global custody                             146              150         296          158              150         308
Maintenance income on operating
 leases                                     78               82         160           84               81         165
Funds under management                     600              426       1,026          520              445         965
Corporate finance                           56               66         122           88               27         115
Other                                      550              635       1,185          522              624       1,146
Total fees and commissions
 receivable                              4,542            4,703       9,245        4,432            4,324       8,756
Less: fees payable                        (685 )           (736 )    (1,421 )       (664 )           (622 )    (1,286 )

Net fees and commissions                 3,857            3,967       7,824        3,768            3,702       7,470

13. Geographical distribution of results

HSBC European Operations
                                    2002 Half-year ended                         2001 Half-year ended
Figures in US$m                  30Jun             31Dec         2002          30Jun            31Dec          2001
Net interest income              3,056              3,287        6,343          2,635           2,928          5,563

Dividend income                    118                 93          211             58              58            116
Net fees and commissions         2,216              2,312        4,528          2,166           2,044          4,210
Dealing profits                    245                263          508            341             367            708
Other income                       516                509        1,025            473             549          1,022
Other operating income           3,095              3,177        6,272          3,038           3,018          6,056

Operating income                 6,151              6,464       12,615          5,673           5,946         11,619

Staff costs                     (2,141 )           (2,284 )     (4,425 )       (2,055 )        (2,172 )       (4,227 )
Premises and equipment            (435 )             (531 )       (966 )         (387 )          (399 )         (786 )
Other                             (812 )             (951 )     (1,763 )         (737 )          (882 )       (1,619 )
Depreciation                      (309 )             (415 )       (724 )         (324 )          (332 )         (656 )
Goodwill amortisation             (307 )             (344 )       (651 )         (319 )          (313 )         (632 )
Operating expenses              (4,004 )           (4,525 )     (8,529 )       (3,822 )        (4,098 )       (7,920 )

Operating profit before
 provisions                      2,147              1,939        4,086          1,851           1,848          3,699

Customers:
- new specific provisions         (448 )             (515 )       (963 )         (328 )          (474 )         (802 )
- releases and recoveries          167                162          329            175             150            325
                                  (281 )             (353 )       (634 )         (153 )          (324 )         (477 )
- net general release                1                 64           65             25              11             36
Total bad and doubtful
 debt charge                      (280 )             (289 )       (569 )         (128 )          (313 )         (441 )

Provisions for contingent
 liabilities and commitments       (20 )                5          (15 )           (9 )           (21 )          (30 )

Amounts written off
 fixed asset investments          (128 )             (139 )       (267 )          (27 )           (63 )          (90 )
Operating profit                 1,719              1,516        3,235          1,687           1,451          3,138

Share of operating (loss) in
 joint ventures                    (20 )               (6 )        (26 )          (42 )           (37 )          (79 )

Share of operating profits in
 associates                          6                 (3 )          3             23              19             42

Investment and fixed asset
 disposal gains                    162                126          288            386              55            441

Profit before tax                1,867              1,633        3,500          2,054           1,488          3,542


HSBC Hong Kong Operations
                                     2002 Half-year ended                          2001 Half-year ended
Figures in US$m                 30Jun            31Dec           2002         30Jun            31Dec           2001
Net interest income             2,065            2,068          4,133         2,073            2,092          4,165

Dividend income                    10               15             25            12               14             26
Net fees and commissions          612              652          1,264           564              608          1,172
Dealing profits                    59               74            133           134               84            218
Other income                      234              261            495           209              227            436
Other operating income            915            1,002          1,917           919              933          1,852

Operating income                2,980            3,070          6,050         2,992            3,025          6,017

Staff costs                      (596 )           (653 )       (1,249 )        (619 )           (660 )       (1,279 )
Premises and equipment           (107 )           (126 )         (233 )        (110 )           (124 )         (234 )
Other                            (207 )           (252 )         (459 )        (199 )           (229 )         (428 )
Depreciation                      (99 )            (99 )         (198 )         (97 )           (102 )         (199 )
Goodwill amortisation               -                -              -             -                -              -
Operating expenses             (1,009 )         (1,130 )       (2,139 )      (1,025 )         (1,115 )       (2,140 )

Operating profit before
 provisions                     1,971            1,940          3,911         1,967            1,910          3,877

Customers:
- new specific provisions        (226 )           (302 )         (528 )        (206 )           (243 )         (449 )
- releases and recoveries         104               81            185           108              135            243
                                 (122 )           (221 )         (343 )         (98 )           (108 )         (206 )

- net general release/              1               96             97            11               (2 )            9
(charge)
Total bad and doubtful
 debt charge                     (121 )           (125 )         (246 )         (87 )           (110 )         (197 )

Provisions for contingent
 liabilities and commitments        4              (18 )          (14 )           2                4              6

Amounts written off
 fixed asset investments           (7 )             (3 )          (10 )         (14 )             (4 )          (18 )
Operating profit                1,847            1,794          3,641         1,868            1,800          3,668

Share of operating profit in
 associates                         8                3             11            12                5             17

Investments and fixed
 asset disposal gains              45               13             58           175               23            198

Profit before tax               1,900            1,810          3,710         2,055            1,828          3,883


HSBC Rest of Asia-Pacific Operations

                                  2002 Half-year ended                             2001 Half-year ended
Figures in US$m                  30Jun            31Dec            2002          30Jun            31Dec         2001
Net interest income                784              823           1,607            725             757         1,482

Dividend income                      1                2               3              1               2             3
Net fees and commissions           358              366             724            332             349           681
Dealing profits                    186              178             364            196             199           395
Other income                        33               50              83             24              34            58
Other operating income             578              596           1,174            553             584         1,137

Operating income                 1,362            1,419           2,781          1,278           1,341         2,619

Staff costs                       (400 )           (426 )          (826 )         (374 )          (397 )        (771 )
Premises and equipment             (72 )            (84 )          (156 )          (69 )           (74 )        (143 )
Other                             (198 )           (256 )          (454 )         (186 )          (215 )        (401 )
Depreciation                       (44 )            (48 )           (92 )          (41 )           (41 )         (82 )
Goodwill amortisation              (17 )            (16 )           (33 )           (4 )            (4 )          (8 )
Operating expenses                (731 )           (830 )        (1,561 )         (674 )          (731 )      (1,405 )

Operating profit before
 provisions                        631              589           1,220            604             610         1,214

Customers:
- new specific provisions         (187 )           (213 )          (400 )         (269 )          (308 )        (577 )
- releases and recoveries          146              174             320            282             124           406
                                  (41)              (39 )           (80 )           13            (184 )        (171 )

- net general release/              (7 )             (2 )            (9 )            5              (6 )          (1 )
(charge)
Total bad and doubtful
 debt (charge)/release             (48 )            (41 )           (89 )           18            (190 )        (172 )

Provisions for contingent
 liabilities and commitments        14                4              18            (33 )           (10 )         (43 )

Amounts written off
 fixed asset investments            (1 )             (1 )            (2 )           (6 )            (5 )         (11 )

Operating profit                   596              551           1,147            583             405           988

Share of operating profit/
 (loss) in joint ventures           (1 )              1               -             (3 )            (2 )          (5 )

Share of operating profit in
 associates                         55               58             113             51              48            99

Investments and fixed asset
 disposal gains/(losses)             3               (3 )             -              3               3             6

Profit before tax                  653              607           1,260            634             454         1,088


HSBC North American Operations
                                  2002 Half-year ended                             2001 Half-year ended
Figures in US$m                30Jun            31Dec           2002         30 Jun              31Dec          2001
Net interest income            1,292            1,440          2,732          1,186              1,264         2,450

Dividend income                   12               12             24             16                 13            29
Net fees and commissions         493              491            984            445                468           913
Dealing profits                   75               86            161            221                125           346
Other income                     123              210            333             94                113           207
Other operating income           703              799          1,502            776                719         1,495

Operating income               1,995            2,239          4,234          1,962              1,983         3,945

Staff costs                     (765 )           (772 )       (1,537 )         (726 )             (714 )      (1,440 )
Premises and equipment          (167 )           (189 )         (356 )         (158 )             (165 )        (323 )
Other                           (296 )           (355 )         (651 )         (390 )             (263 )        (653 )
Depreciation                     (64 )            (67 )         (131 )          (62 )              (62 )        (124 )
Goodwill amortisation            (67 )            (79 )         (146 )          (72 )              (73 )        (145 )
Operating expenses            (1,359 )         (1,462 )       (2,821 )       (1,408 )           (1,277 )      (2,685 )

Operating profit before
 provisions                      636              777          1,413            554                706         1,260

Customers:
- new specific provisions       (243 )           (156 )         (399 )         (145 )             (247 )        (392 )
- releases and recoveries         64               50            114             47                 38            85
                                (179 )           (106 )         (285 )          (98 )             (209 )        (307 )
- net general (charge)/           (3 )            (12 )          (15 )          (20 )               27             7
release
Total bad and doubtful
 debt charge                    (182 )           (118 )         (300 )         (118 )             (182 )        (300 )

Provisions for contingent
 liabilities and
commitments
 (excluding Princeton)            (1 )              4              3             (2 )               (5 )          (7 )
Amounts written off fixed
 asset investments                (2 )             (7 )           (9 )           (4 )               (1 )          (5 )
Operating profit                 451              656          1,107            430                518           948
Share of operating (loss)
in joint ventures                 (2 )              -             (2 )           (3 )               (4 )          (7 )

Share of operating profit
in associates                      4                4              8              4                  1             5

Investments and fixed
assets
 disposal gains                  105               20            125            110                 22           132
Profit before tax (before
 Princeton provision)            558              680          1,238            541                537         1,078

Princeton provision                -                -              -              -               (575 )        (575 )

Profit before tax                558              680          1,238            541                (38 )         503


HSBC South American Operations
                                  2002 Half-year ended                              2001 Half-year ended
Figures in US$m                30Jun            31Dec            2002          30Jun               31Dec          2001
Net interest income              396              249             645            573                 492         1,065

Dividend income                   15                -              15             12                   -            12
Net fees and commissions         179              145             324            261                 233           494
Dealing profits                   81               66             147            (16 )                34            18
Other income                      87               23             110            183                 173           356
Other operating income           362              234             596            440                 440           880

Operating income                 758              483           1,241          1,013                 932         1,945

Staff costs                     (300 )           (272 )          (572 )         (406 )              (430 )        (836 )
Premises and equipment           (63 )            (50 )          (113 )          (76 )               (77 )        (153 )
Other                           (185 )           (145 )          (330 )         (220 )              (215 )        (435 )
Depreciation                     (29 )            (16 )           (45 )          (30 )               (43 )         (73 )
Goodwill amortisation             (4 )            (20 )           (24 )           (6 )                (8 )         (14 )
Operating expenses              (581 )           (503 )        (1,084 )         (738 )              (773 )      (1,511 )

Operating profit/(loss)
 before provisions               177              (20 )           157            275                 159           434

Customers:
- new specific provisions       (236 )           (152 )          (388 )         (131 )              (215 )        (346 )
- releases and recoveries         21               37              58             17                  26            43
                                (215 )           (115 )          (330 )         (114 )              (189 )        (303 )
Argentina general                114               82             196              -                (600 )        (600 )
- net general release/            17                -              17            (12 )               (12 )         (24 )
(charge)
Total bad and doubtful
 debt charge                     (84 )            (33 )          (117 )         (126 )              (801 )        (927 )

Provisions for contingent          -              (31 )           (31 )            -                   -             -
 liabilities
Loss on foreign currency
 redenomination in
 Argentina                       (45 )            (23 )           (68 )            -                (520 )        (520 )

Amounts written off
 fixed asset investments          (2 )            (34 )           (36 )           (2 )                 1            (1 )

Operating profit/(loss)           46             (141 )           (95 )          147              (1,161 )      (1,014 )

Share of operating profit
 in associates                     -                -               -              1                   -             1

Investments and fixed
assets disposal (losses)/gains    35                2              37              2                  (5 )          (3 )

Profit/(loss) before tax          81             (139 )           (58 )          150              (1,166 )      (1,016 )

14. Registers of shareholders

The Overseas Branch Register of shareholders in Hong Kong will be closed for one
day, on Friday 21 March 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 4.00 pm on Thursday 20 March 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 4.00 pm on Friday 21 March 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 12 noon on Friday 21 March 2003 in order to receive the dividend.

15. 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                                                       31Dec02                   31Dec01

Closing :    HK$/US$                                               7.798                    7.798
             £/US$                                                 0.620                    0.690

Average :    HK$/US$                                               7.799                    7.800
             £/US$                                                 0.666                    0.695


16. 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.

17. Dealings in HSBC Holdings shares

Except for dealings by HSBC Investment Bank plc (until 29 November 2002) and
HSBC Bank plc (since 30 November 2002), trading as intermediaries in the
Company's shares in London and the redemption on 31 July 2002 by the Company of
£413,000,000 11.69 per cent Subordinated Bonds 2002 of £1 each, neither the
Company nor any subsidiary undertaking has bought, sold or redeemed any
securities of the Company during the year ended 31 December 2002.

18. 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
statutory accounts for the year ended 31 December 2002 will be 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; the report was unqualified and did not contain a
statement under Section 237(2) or (3) of the Act.

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. Remuneration

Within the authority delegated by the Board of Directors, the Remuneration
Committee is responsible for determining the remuneration policy of HSBC. This
includes the terms of bonus plans, share option plans and other long-term
incentive plans, and for agreeing the individual remuneration packages of
executive Directors and other senior Group employees. No Directors are involved
in deciding their own remuneration.


The Remuneration Committee applies the following key principles:


* to pay against a market of comparative organisations;

* to offer fair and realistic salaries with an important element of variable pay
based on relative performance;

* to have as many top-performers as possible at all levels within HSBC
participating in some form of long-term share plan; and

* for new employees only, since 1996, to follow a policy of moving progressively
from defined benefit to defined contribution Group pension schemes.


Salaries are reviewed annually in the context of individual and business
performance, market practice, internal relativities and competitive market
pressures. Allowances and benefits are largely determined by local market
practice. The level of performance-related variable pay depends upon the
performance of HSBC Holdings, constituent businesses and of the individual
concerned. Bonus ranges are reviewed in the context of prevailing market
practice and overall remuneration.


In order to align the interests of staff with those of shareholders, share
options are awarded to employees under the Group Share Option Plan and the
savings-related share option plans. When share options are granted which are to
be satisfied by the issue of new shares, the impact on existing equity is shown
in diluted earnings per share on the face of the consolidated profit and loss
account, with further details being disclosed in Note 11 of the 'Notes on the
Financial Statements' in the Annual Report and Accounts. The dilutive effect of
exercising all outstanding share options would be 0.5 per cent of basic earnings
per share.


There were 184,405 full-time equivalent employees at 31 December 2002 (2001:
171,049). During 2002, 41,401 employees in 51 countries and territories applied
for savings-related share options. Performance related share options were
awarded to over 37,773 employees worldwide at all levels of the organisation.
Nearly 4,900 employees in the UK participate in the UK Share Ownership Plan and
around 10,000 CCF employees participate in the Plan d'Epargne in France through
which they subscribe for HSBC shares.

21. Annual Review and Annual Report and Accounts

The Annual Review 2002 and/or Annual Report and Accounts 2002 will be mailed to
shareholders on or about 1 April 2003. Copies may be obtained from Group
Corporate Affairs, HSBC Holdings plc, 8 Canada Square, London E14 5HQ, United
Kingdom; Group Public Affairs, The Hongkong and Shanghai Banking Corporation
Limited, 1 Queen's Road Central, Hong Kong; Group Public Affairs, HSBC Bank USA,
452 Fifth Avenue, New York, NY 10018, USA;CCF, Direction de la Communication,
103 avenue des Champs-Elysees, 75419 Paris Cedex 08, France; or from the HSBC
Group website - www.hsbc.com.

Chinese translations of the Annual Review and Annual Report and Accounts may be
obtained on request from Central Registration Hong Kong Limited, Rooms
1901-1905, Hopewell Centre, 183 Queen's Road East, Hong Kong.

A French translation of the Annual Review may be obtained on request from CCF,
Direction de la Communication, 103 avenue des Champs-Elysees, 75419 Paris Cedex
08, France.

The Annual Report and Accounts and Annual Review will be available on the Stock
Exchange of Hong Kong's website - www.hkex.com.hk.

Custodians or nominees that wish to distribute copies of the Annual Review and/
or Annual Report and Accounts to their clients may request copies for collection
by writing to Group Corporate Affairs at the address given above. Requests must
be received no later than 10 March 2003.

22. Annual General Meeting

The Annual General Meeting of the Company will be held at the Barbican Hall,
Barbican Centre, London EC2 on 30 May 2003 at 11 a.m.

Notice of the meeting will be mailed to shareholders on or about 1 April 2002.

23. Interim results and first interim dividend for 2003

The interim results for the six months to 30 June 2003 will be announced on
Monday 4 August 2003. It is intended that any first interim dividend for 2003
that is announced on that date would be payable on 7 October 2003 to
shareholders on the Register on 22 August 2003. The Company's shares would be
quoted ex-dividend in London and in Hong Kong on 20 August 2003 and in Paris on
25 August 2003. The American Depository Shares would be quoted ex-dividend in
New York on 20 August 2003.

24. 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, NY 10018, USA;CCF, Direction de la
Communication, 103 avenue des Champs-Elysees, 75419 Paris Cedex 08, France. The
news release will also be available on the HSBC Group website - www.hsbc.com.

25. Household acquisition

A circular relating to the proposed acquisition of Household International has
been mailed to HSBC Holdings shareholders. The circular incorporates notice of
an Extraordinary General Meeting to be held on 28 March 2003 at which an
ordinary resolution will be proposed to obtain the approval of HSBC Holdings
shareholders for the acquisition of Household.

Investors and security holders are advised to read the prospectus regarding the
business combinations transaction referenced in this announcement because it
contains important information. The HSBC prospectus also constitutes the
Household proxy statement and the final proxy statement/prospectus has been
filed with the Securities and Exchange Commission by both companies. Household
shareholders may obtain a free copy of the final proxy statement/prospectus and
other related documents filed by either company at the SEC's website at
www.sec.gov. The final proxy statement/prospectus and other documents may also
be obtained from HSBC by contacting HSBC, Attention Patrick McGuinness, Investor
Relations and/or Household by contacting Household, Attention Craig Streem,
Investor Relations.

HSBC and Household and their respective directors, executive officers and
certain other members of management and employees may be soliciting proxies from
Household shareholders in favour of the acquisition. Information concerning the
participants is set forth in the final proxy statement/prospectus that has been
filed with the Securities and Exchange Commission.


                      This information is provided by RNS
            The company news service from the London Stock Exchange