4/4: HSBC USA Inc 1H04 (1/1)

HSBC Holdings PLC
04 August 2003

                                 HSBC USA INC.

                       2003 INTERIM RESULTS - HIGHLIGHTS

* Net income for the first half of 2003 increased by 28.5 per cent to US$527
million compared to US$410 million in the first half of 2002.

* Return on average common equity for the first half of 2003 was 15.0 per cent
compared to 12.1 per cent during the first half of 2002.

* The cost:income ratio for the first half of 2003 was 50.8 per cent compared to
54.2 per cent for the same period in 2002.

* Tier 1 capital to risk-weighted assets was 9.2 per cent at 30 June 2003
compared to 8.6 per cent at 30 June 2002.

* Client assets under administration at 30 June 2003 were US$52.4 billion, of
which US$35.6 billion were funds under management and US$16.8 billion were
custody accounts.

Financial Commentary

HSBC USA Inc. reported net income of US$527 million for the six months ended 30
June 2003, an increase of 28.5 per cent from US$410 million for the first six
months of 2002. The strong growth in net income was largely the result of a
better yielding mix of loans, securities and deposits on the balance sheet and
lower funding costs, improved trading revenues in Treasury, and lower credit
loss provisions. In addition, most categories of fee-based income showed
improvement.

Commenting on the results, Youssef A Nasr, Chief Executive Officer of HSBC USA
Inc., said: "We are pleased with the results that we have reported today for the
first half of 2003. These results demonstrate growth in our core fee-generating
businesses, as well as growth in our retail loan and deposit business. First
half results were bolstered by improved results in our Treasury business.

"Despite the protracted weakness in the U.S. economy and a continuing rise in
unemployment, credit quality has shown improvement which is reflected in lower
levels of provisioning.

"As we look to the second half of 2003, we continue to get mixed signals from
the various economic indicators and as a result, we remain cautious about the
general economic outlook ahead."

Net interest income

For the six months ended 30 June 2003 net interest income increased by US$99
million, or more than 8 per cent, to US$1.26 billion. A higher level of interest
earning assets, a better yielding mix of loans, securities and deposits, and
lower funding costs contributed to the result. The steeper yield curve has led
to lower funding costs and increased interest income from funding longer term
investment securities and residential mortgages with short term liabilities.

Other operating income

For the six months ended 30 June 2003 other operating income increased over 23
per cent to US$668 million from US$543 million for the comparable period in
2002. This increase was driven by solid growth in trading revenues and most
categories of fee-based income. Fees and commissions, including commercial loan
fees, fees on deposit and cash management products and bankcard fees, grew
almost 19 per cent from US$191 million for the six months ended 30 June 2002 to
US$227 million for the six months ended 30 June 2003. This increase includes
US$23 million in revenues from Wealth & Tax Advisory Services, a business which
was acquired in July 2002. However, in wealth management, there was some
slowdown in sales of annuities and mutual funds associated with the
uncertainties affecting the stock market and lower levels of interest rates.
Insurance revenues increased by 57.1 per cent to US$33 million for the six
months ended 30 June 2003 up from US$21 million for the comparable period in
2002. Over 1,600 professionals are now licensed to sell insurance and certain
annuity products through the bank's retail network. In addition, other income in
the first half of 2003 included US$21 million received from the Internal Revenue
Service for settlement of interest compensation on a corporate tax refund for
prior years.

Treasury trading revenues for the six months ended 30 June 2003 were US$161
million, an increase of US$114 million compared to the first six months of 2002,
including strong improvements in the foreign exchange and derivatives
businesses. Mortgage-related other operating income, including servicing fees
net of amortization and impairment, gains on sales of originated mortgages, and
the fair value adjustments associated with certain hedge instruments, and gains
on the sale of securities, was US$17 million lower in the first half of 2003
compared to the first half of 2002. This decrease was primarily due to declining
interest rates causing impairment to the value of the mortgage servicing rights.
Total gains from the sales of securities for the six months ended 30 June 2003
were US$65 million, a decrease of US$39 million from US$104 million in the
comparable period in 2002.

Operating expenses

Operating expenses increased by 6.1 per cent to US$977 million for the six
months ended 30 June 2003 compared to US$921 million in the 2002 comparable
period. This increase was primarily attributable to an increase in salary and
employee benefits of US$60 million, which includes certain volume driven
(mortgage) and revenue driven (Treasury) incentive compensation programs, an
increase in pension costs and the costs associated with the Wealth & Tax
Advisory Services business. Offsetting these increases, other expenses are lower
in 2003 as 2002 charges included reserves for letters of credit and for a
leveraged lease. The cost:income ratio for the first six months of 2003 was 50.8
per cent compared to 54.2 per cent for the six months ended 30 June 2002,
reflecting faster growth in net interest and other operating income, as well as
reductions in other expenses.

Credit quality and provisions for credit losses

We continue to see improvement in credit quality. The provision for credit
losses for the first six months of 2003 of US$88 million was US$42 million lower
than in 2002. Net charge-offs of US$97 million for the first six months of 2003
were relatively flat to 2002. The reserve to non-accrual ratio decreased to
120.9 per cent at 30 June 2003 from 129.7 per cent at 30 June 2002, primarily
due to a lower level of required reserves.

Provision for income taxes

The provision for income taxes was US$331 million for the first half of 2003
compared to US$238 million in the comparable period for 2002. The effective tax
rate was 38.6 per cent in 2003 and 36.7 per cent in the 2002 period, driven by
the growth in pre tax income.

Balance sheet

Total assets of HSBC USA Inc. grew more than 6 per cent to US$93.0 billion at 30
June 2003 compared to US$87.2 billion at 30 June 2002. Total deposits grew more
than 7 per cent to US$60.4 billion at 30 June 2003 compared to US$56.4 billion
at 30 June 2002. Total loans grew almost 4 per cent to US$43.2 billion at 30
June 2003, up from US$41.7 billion at 30 June 2002.

Compared to 30 June 2002, residential mortgage loans outstanding increased while
the level of lower margin large corporate loans declined. The mix of personal
deposits shifted positively toward lower yielding demand and savings deposits
and fewer certificates of deposit. During the same period, commercial deposits
also increased.

HSBC Bank USA's residential mortgage business, with approximately 339,000
customers, originated US$13.4 billion in mortgages in the first half of 2003, an
increase of approximately 37 per cent over the US$9.8 billion originated in the
first half of 2002.

Total assets under administration

Total funds under management at 30 June 2003 were US$35.6 billion, up US$3.1
billion, or more than 9 per cent from 30 June 2002, largely due to improvements
in the equities markets. Including custody balances, assets under administration
at 30 June 2003 totalled US$52.4 billion.

Capital ratios

HSBC USA Inc.'s tier 1 capital to risk-weighted assets ratio was 9.2 per cent at
30 June 2003 compared to 8.6 per cent at 30 June 2002. Total capital to
risk-weighted assets were 13.7 per cent at both 30 June 2003 and 30 June 2002.

As part of its strategy of providing customers with multiple choices for product
and service delivery, HSBC Bank USA offers a comprehensive internet banking
service. At 30 June 2003 more than 455,000 customers had registered for the
service, up from approximately 410,000 at year-end 2002. The HSBC Bank USA web
site, us.hsbc.com, where customers can apply for accounts, conduct financial
planning and link to online services, receives approximately 53,000 visits
daily. In addition, debit card usage has increased approximately 22 per cent to
more than 18 million transactions in the first half of 2003.

About HSBC Bank USA

HSBC Bank USA has more than 400 branches in New York State, giving it the most
extensive branch network in New York State. The bank also has nine branches in
Florida, two in Pennsylvania, four in California, one in Oregon, one in
Washington and 15 in Panama.

HSBC Bank USA is the tenth largest US commercial bank ranked by assets and is a
wholly-owned subsidiary of HSBC USA Inc., an indirectly-held, wholly-owned
subsidiary of HSBC Holdings plc (NYSE: HBC). Headquartered in London, and with
over 9,500 offices in 79 countries and territories, the HSBC Group is one of the
world's largest banking and financial services organizations.

For more information about HSBC Bank USA and its products and services visit
www.us.hsbc.com



Summary
                                                                  Quarter ended                 Six Months ended
Figures in US$ millions                                          30Jun03       30Jun02       30Jun03         30Jun02

Earnings
Net income  ^                                                        273           199           527             410

Performance ratios (%)

Return on average common equity                                     15.3          11.6          15.0            12.1
Net interest margin                                                  2.8           2.7           2.8             2.7
Cost:income ratio                                                   50.8          56.1          50.8            54.2
Other operating income to total income                              37.0          31.7          34.8            32.0

Credit information
Non-accruing loans at end of period                                                              394             417
Net charge-offs                                                       48            32            97              94
Allowance available for credit losses
 - Balance at end of period                                                                      476             540
 - As a percentage of non-accruing loans                                                       120.9 %         129.7 %
 - As a percentage of loans outstanding                                                          1.1 %           1.3 %

Average balances
Assets                                                            89,807        87,296        90,377          87,753
Loans                                                             43,542        41,684        43,372          41,893
Deposits                                                          60,085        58,962        60,012          59,222
Common equity                                                      7,023         6,652         6,926           6,652

Capital ratios (%) at end of period
Leverage ratio                                                                                   6.3             5.7
Tier 1 capital to risk-weighted assets                                                           9.2             8.6
Total capital to risk-weighted assets                                                           13.7            13.7

Assets under administration at end of period
Funds under management                                                                        35,612          32,547
Custody accounts                                                                              16,772          15,535
Total assets under administration                                                             52,384          48,082


 ^  During the fourth quarter of 2002, HSBC USA Inc. adopted SFAS 147,
Acquisitions of Certain Financial Institutions, and as a result US$65 million of
intangible assets that had been previously reported as identifiable intangible
assets were reclassified to goodwill effective 1 January 2002. Therefore, the
amortization expense previously recorded during the second quarter of 2002 and
the first half of 2002 was reversed, resulting in an increase in net income of
US$1 million and US$2 million, respectively.

Consolidated Statement of Income
                                                               Quarter ended                  Six Months ended
Figures in US$ millions                                  30Jun03         30Jun02            30Jun03         30Jun02

Interest income
Loans                                                        585             631            1,196            1,266
Securities                                                   212             235              452              483
Trading assets                                                34              41               74               74
Short-term investments                                        22              42               43               87
Other                                                          7               6               14               12
Total interest income                                        860             955            1,779            1,922
Interest expense
Deposits                                                     173             257              361              529
Short-term borrowings                                         21              66               58              119
Long-term debt                                                57              58              105              118
Total interest expense                                       251             381              524              766
Net interest income                                          609             574            1,255            1,156
Provision for credit losses                                   31              56               88              130
Net interest income, after provision for credit losses       578             518            1,167            1,026
Other operating income
Trust income                                                  23              23               46               48
Service charges                                               52              51              103               99
Mortgage banking revenue  ^                                  (18)             32                1               49
Other fees and commissions                                   118              99              227              191
Other income                                                  58              25               95               50
Trading revenues
 - Treasury businesses and other                              91               4              161               47
 - Residential mortgage business related  ^ ^                 (4)            (34)             (30)             (45)
Total trading revenues                                        87             (30)             131                2
Security gains, net  ^ ^                                      39              66               65              104
Total other operating income                                 359             266              668              543
Total income from operations                                 937             784            1,835            1,569
Operating expenses
Salaries and employee benefits                               278             243              556              496
Occupancy expense, net                                        37              38               75               74
Other expenses                                               177             190              346              351
Total operating expenses                                     492             471              977              921
Income before taxes                                          445             313              858              648
Applicable income tax expense                                172             114              331              238
Net income                                                   273             199              527              410

 ^  Mortgage banking revenue includes mortgage servicing fees, net of
amortization and impairment, gains on sale of mortgages and fair value
adjustments related to qualifying hedges (under FAS 133) of residential
mortgages originated for sale.

 ^ ^  Trading revenues include the mark-to-market on non-qualifying financial
instruments (under FAS 133) providing economic protection on mortgage servicing
rights values and interest rate and forward sales commitments in the residential
mortgage business. Some security gains in the quarter ended and in the six
months ended 30 June 2003 were also related to providing economic protection on
mortgage servicing rights values.

Consolidated Balance Sheet
Figures in US$ millions                                           At 30Jun03           At 31Dec02             At 30Jun02

Assets
Cash and due from banks                                                2,286                2,081                  1,817
Interest bearing deposits with banks                                   1,309                1,048                  1,792
Federal funds sold and securities purchased
 under resale agreements                                               5,083                2,743                  5,979
Trading assets                                                        12,601               13,408                 11,517
Securities available for sale                                         14,912               14,694                 13,738
Securities held to maturity                                            4,628                4,629                  3,966
Loans                                                                 43,247               43,636                 41,694
Less - allowance for credit losses                                       476                  493                    540
Loans, net                                                            42,771               43,143                 41,154

Premises and equipment                                                   685                  726                    739
Accrued interest receivable                                              290                  329                    364
Equity investments                                                       284                  278                    276
Goodwill                                                               2,816                2,829                  2,831
Other assets                                                           5,325                3,518                  2,978
Total assets                                                          92,990               89,426                 87,151

Liabilities
Deposits in domestic offices
 - Non-interest bearing                                                5,844                5,731                  5,043
 - Interest bearing                                                   35,613               34,902                 34,258
Deposits in foreign offices
 - Non-interest bearing                                                  433                  398                    427
 - Interest bearing                                                   18,491               18,799                 16,652
Total deposits                                                        60,381               59,830                 56,380

Trading account liabilities                                            7,233                7,710                  6,320
Short-term borrowings                                                  7,172                7,392                 10,782
Interest, taxes and other liabilities                                  6,766                3,422                  2,597
Subordinated long-term debt and perpetual capital
 notes                                                                 2,118                2,109                  2,569
Guaranteed mandatorily redeemable securities                           1,053                1,051                    735
Other long-term debt                                                     601                  515                    565
Total liabilities                                                     85,324               82,029                 79,948

Shareholders' equity
Preferred stock                                                          500                  500                    500
Common shareholders' equity
 - Common stock  ^                                                         -                    -                      -
 - Capital surplus                                                     6,021                6,057                  6,042
 - Retained earnings                                                     838                  578                    554
 - Accumulated other comprehensive income                                307                  262                    107
Total common shareholders' equity                                      7,166                6,897                  6,703
Total shareholders' equity                                             7,666                7,397                  7,203
Total liabilities and shareholders' equity                            92,990               89,426                 87,151

 ^  Less than $500,000.


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