HSBC Bank Canada 1Q01 Results

HSBC Hldgs PLC
8 May 2001



                       HSBC BANK CANADA
            FIRST QUARTER 2001 RESULTS - HIGHLIGHTS


* Income before taxes and non-controlling interest in
income of subsidiaries was C$100 million for the quarter ended
31 March 2001, an increase of 33.3 per cent over the
comparative quarter in 2000.

* Net income was C$55 million for the quarter ended 31
March 2001, an increase of 17.0 per cent over the comparative quarter 
in 2000.

* Return on average common equity of 16.3 per cent for the
quarter ended 31 March 2001 compared to 18.9 per cent over the
comparative quarter in 2000.

* Total assets of C$31.1 billion at 31 March 2001 (C$26.4 billion
at 31 March 2000).

* Total capital ratio of 11.3 per cent and tier 1 capital ratio
of 8.5 per cent at 31 March 2001 (10.6 per cent and 7.7 per
cent respectively at 31 March 2000).

Highlights

HSBC Bank Canada reports 33.3 per cent increase in income
before taxes and non-controlling interest in income of
subsidiaries

HSBC Bank Canada recorded income before taxes and non-
controlling interest in income of subsidiaries of C$100 million
for the three months ended 31 March 2001, compared to C$75
million for the first quarter of 2000 and C$105 million
for the fourth quarter of 2000.  Return on equity was 16.3
per cent for the three months ended 31 March 2001, compared to
18.9 and 12.1 per cent for the first and fourth quarters of
2000 respectively.

Return on equity was lower for the three months
ended 31 March 2001 than for the same period in 2000, as a
result of increasing the capital base to support the
strong loan growth during 2000.  The return on equity for the
fourth quarter of 2000 was negatively impacted by a higher
provision for income taxes.

The cost:income ratio, excluding amortisation of goodwill and
intangible assets, for the three months ended 31 March 2001 was
58.5 per cent compared to 69.0 per cent in the first quarter
of 2000 and 61.0 per cent for the fourth quarter of 2000.

Martin Glynn, president and chief executive officer, said: 'Our
results were in line with expectations. The bank continues to
benefit from solid business growth across all customer lines.

'Income before taxes and non-controlling interest in income of
subsidiaries continues to be strong despite weak equity markets
during the first quarter of 2001.  Our continuing emphasis on
controlling costs has again improved our cost:income ratio.

'During the quarter, we opened ServicePlus East, a regional
call centre located in Ontario, to better serve our customers
in Central and Eastern Canada.  Our customers continue to use
telephone and internet banking services in increasing numbers,
 allowing them more control over their finances.

'During the quarter we acquired Credit Lyonnais Canada and CCF
Canada.  These acquisitions enhance our position in the
Canadian financial services marketplace.'

Financial Commentary

Net interest income

Net interest income for the first quarter of 2001 was C$175
million, an increase of C$23 million, or 15.1 per cent, over
the first quarter of 2000.  This increase is attributable to
strong growth in the loan portfolio during 2000, and the
acquisition of Republic National Bank of New York (Canada)
('Republic Canada') at the beginning of the second quarter of
2000 which added approximately C$1.0 billion in loans.

The net interest margin, as a percentage of interest earning
assets, was unchanged at 2.64 per cent in the first quarter of
2001 compared to the same period in 2000.  Compared to the
fourth quarter of 2000, net interest income was C$4 million
lower and the net interest margin was 9 basis points lower, as
the fourth quarter net interest margin benefited from a lower
wholesale cost of funds, as markets anticipated future
reductions in the prime lending rate.

Other income

Other income was C$102 million in the first quarter of 2001
compared to C$125 million in the first quarter of 2000 and
C$113 million in the fourth quarter of 2000.  Equity
markets deteriorated sharply in the first quarter of 2001,
mainly during the last two months of the quarter. This
contrasted with the improving equity markets over the
same period in 2000 when most market indices
reached new all-time highs.  As a result of the subsequent
market decline, investment and securities services income and
trading revenues were lower in the first quarter of 2001
compared to the first and fourth quarters of 2000.  In
addition, the first and fourth quarters of 2000 included C$11
million and C$4 million respectively from HSBC InvestDirect (Canada) Inc.
('InvestDirect') which was transferred to Merrill Lynch HSBC
in the fourth quarter of 2000.

The decreases in investment and securities services and trading
income were partially offset by higher bankers' acceptance,
letter of credit and guarantee fees generated from increased
volumes in the fourth quarter of 2000 and the first quarter of
2001.  Borrowers switched from term lending-based facilities
to bankers' acceptances and shorter term off-balance sheet
financing in anticipation of further prime lending rate
decreases.

Non-interest expenses
Non-interest expenses were C$164 million in the quarter ended
31 March 2001 compared to C$191 million and C$180 million
in the first and fourth quarters of 2000
respectively.  Salaries and employee benefits and other
expenses were lower due primarily to lower performance-based
compensation and volume-driven transaction expenses. The first
and fourth quarters of 2000 also included C$3 million and
C$4 million, respectively, of non-interest expenses from
InvestDirect.

The cost:income ratio, excluding amortisation expense for
goodwill and intangible assets, for the first quarter of 2001
improved by 10.5 percentage points to 58.5 per cent from 69.0
per cent in the first quarter of 2000 and 61.0 per cent in the
fourth quarter of 2000.  This was as a result of continuing
efforts to improve operational efficiencies and control expenses
as capital market revenues declined and the one-time expense
recoveries referred to above.

Provision for income taxes

The provision for income taxes was C$41 million in the
first quarter of 2001 compared to C$28 million in the first
quarter of 2000 and C$61 million in the fourth quarter of 2000.
The higher tax charge for 2001 compared to the first quarter of
2000 was as a result of lower levels of non-taxable income and
other deductions for income tax available for utilisation.  In
the fourth quarter of 2000, an additional C$12 million income
tax provision was made resulting from announced lower corporate
income tax rates which reduced the value of future income tax
assets.

Credit quality and provision for credit losses

The provision for credit losses was C$13 million for the first
quarter of 2001 compared to C$11 million for the same period in
2000 and C$7 million in the fourth quarter of 2000. Credit
quality remained strong as the provision for credit losses as a
percentage of average loans and bankers' acceptances was
virtually unchanged at 0.24 per cent compared to 0.23 per cent
for the first quarter in 2000.  This was despite an overall
increase in the volume of interest earning assets for the first
quarter of 2001 compared to the same period in 2000.  The
allowance for credit losses exceeded gross impaired loans by
C$111 million at 31 March 2001 compared to C$76 million at 31
March 2000 and C$112 million at 31 December 2000.

Balance sheet

Total assets at 31 March 2001 were C$31.1 billion, up C$4.7
billion, or 17.9 per cent, from 31 March 2000.  Loans increased
by C$3.3 billion, of which approximately C$1.0 billion was from
the acquisition of Republic Canada which took effect on 1
April 2000. The remaining increase was due to the strong
organic growth of the commercial loan portfolio over the course
of 2000 reflecting the strength in the Canadian economy.  In
the first quarter of 2001, loans increased by C$1.0 billion.

Total deposits increased C$3.7 billion from 31 March 2000 to 31
March 2001.  Of this increase, C$1.1 billion was related to the
acquisition of Republic Canada.  Personal deposits grew C$1.4
billion to C$12.6 billion at 31 March 2001 compared to C$11.2
billion at 31 March 2000.  Commercial deposits increased by
C$2.8 billion to C$11.6 billion over the same period.  Growth
in deposits during the first quarter of 2001 was C$1.3 billion.

Funds under management

Funds under management stood at C$9.6 billion at 31 March
2001 compared to C$11.2 billion at 31 March 2000 and C$10.2
billion at 31 December 2000.  The decrease from the first
quarter of 2000 related primarily to the reduction of
C$1.8 billion in the fourth quarter of 2000 on the
transfer of InvestDirect.  The gross increase in funds under
management for the first quarter of 2001 was more than offset
by a decline in market values over the quarter.

Capital

The bank's tier 1 capital ratio was 8.5 per cent and the
total capital ratio was 11.3 per cent as at 31 March 2001
compared to 7.7 per cent and 10.6 per cent, respectively, as at
31 March 2000 and 8.6 per cent and 11.5 per cent as at 31
December 2000.

Dividends

At its meeting on 4 May 2001, the Board of Directors declared a
regular dividend of 39.0625 cents per share on the class 1
preferred shares - series A, payable on 30 June 2001 for
shareholders of record on 15 June 2001. The total dividend of
C$2 million will be paid in cash on 3 July 2001, the first
working day after 30 June.

Shareholder information

HSBC Bank Canada, an indirectly-held, wholly-owned subsidiary
of HSBC Holdings plc, has more than 160 offices. With over
6,500 offices in 79 countries and territories and assets of
US$674 billion at 31 December 2000, the HSBC Group is one of
the world's largest banking and financial services
organisations.

Copies of the Interim Report will be sent to shareholders
during May 2001.

This news release 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.


Highlights


Figures in C$ millions
(except per share                            Quarter ended        
amounts)                           31Mar01       31Dec00   31Mar00

Earnings
Net interest income                    175          179       152
Income before taxes and
  non-controlling
  interest in subsidiaries             100          105        75

Net income                              55           40        47
Basic earnings per common
  share                               0.12         0.09      0.17

Financial ratios (%)
Return on average common
  equity                              16.3         12.1      18.9
Return on average assets              0.70         0.50      0.64
Net interest margin                   2.64         2.73      2.64
Cost:income ratio^                    58.5         61.0      69.0
Provision for credit
  losses/average loans
  and acceptances                     0.24         0.12      0.23
Other income/total income             36.8         38.7      45.1

^ Excluding amortisation of goodwill and intangible assets.


Figures in C$ millions         At 31Mar01   At 31Dec00  At 31Mar00


Financial position
Total assets                       31,089       29,438     26,360
Total loans                        20,751       19,753     17,491
Total deposits                     24,841       23,511     21,152
Shareholders' equity                1,459        1,406      1,295

Assets under administration
Funds under management              9,634       10,198     11,222
Custodial assets under
  administration                    2,433        2,500      2,620

Capital ratios (%)
Total capital                        11.3         11.5       10.6
Tier 1 capital                        8.5          8.6        7.7

Consolidated Statement of Income (Unaudited)

Figures in C$ millions
(except share and                                Quarter ended
per share amounts)                      31Mar01    31Dec00     31Mar00

Interest and dividend income
Loans                                      378         397         311 
Other                                       88          87          77 
                                           466         484         388 

Interest expense
Deposits                                  (283)       (297)       (229)
Debentures                                  (8)         (8)         (7)
                                          (291)       (305)       (236)

Net interest income                        175         179         152 

Provision for credit
  losses                                   (13)         (7)        (11)
Net interest income
  after provision for
  credit losses                            162         172         141

Other income                               102         113         125

Net interest and other
  income                                   264         285         266

Non-interest expenses
Salaries and employee
  benefits                                 (84)        (92)       (101)
Premises and equipment                     (29)        (25)        (28)
Other                                      (51)        (63)        (62)
Total non-interest
  expenses                                (164)       (180)       (191)

Income before taxes and non-
  controlling interest in
  income of subsidiaries                   100         105          75
Provision for income
  taxes                                    (41)        (61)        (28)
Non-controlling
  interest in income of
  subsidiaries                              (4)         (4)          -
Net income                                  55          40          47
Preferred share
  dividends                                 (2)         (2)          -

Net income attributable
  to common shares                          53          38          47

Average common shares
  outstanding (000s)                   456,168     417,342     280,168
Basic earnings per
  common share                            0.12        0.09        0.17

Condensed Consolidated Balance Sheet (Unaudited)

Figures in C$ millions      At 31Mar01     At 31Dec00   At 31Mar00

Assets

Cash and deposits with Bank
  of Canada                        411           375          235
Deposits with regulated
  financial institutions         2,456         1,997        2,512
                                 2,867         2,372        2,747

Investment securities            2,958         2,840        2,612
Trading securities                 732           955          363
                                 3,690         3,795        2,975

Assets purchased under
  reverse repurchase
  agreements                       472           436          454

Loans
  Businesses and government     12,000        11,330        9,780
  Residential mortgage           7,043         6,809        5,853
  Consumer                       2,003         1,899        2,147
Allowance for credit
 losses                           (295)         (285)        (289)
                                20,751        19,753        17,491

Customers' liability under
  acceptances                    1,979         2,134        1,832
Other assets                     1,330           948          861
                                 3,309         3,082        2,693
Total assets                    31,089        29,438       26,360

Liabilities and shareholders' equity

Deposits
Regulated financial
  institutions                     608           707        1,150
  individuals                   12,620        12,116       11,188
Businesses and
 governments                    11,613        10,688        8,814
                                24,841        23,511       21,152

Acceptances                      1,979         2,134        1,832
Assets sold under
  repurchase agreements             91            15          145
Other liabilities                2,043         1,720        1,513
Subordinated debt                  446           422          393
Non-controlling interest in
  subsidiaries                     230           230           30
                                 4,789         4,521        3,913

Shareholders' equity
   Preferred shares                125           125          270
   Common shares                   935           935           75
   Contributed surplus             165           165          165
   Retained earnings               234           181          785
                                 1,459         1,406        1,295

Total liabilities and
  shareholders' equity          31,089        29,438       26,360

Condensed Consolidated Statement of Cash Flows (Unaudited)

                                                Quarter ended
Figures in C$ millions                 31Mar01     31Dec00    31Mar00

Cash flows from (used in)
   operating activities                    241       (311)        133

Cash flows from
  financing activities                   1,404        331         948

Cash flows (used in) from
  investing activities                  (1,143)       327        (511)

Increase in cash and
  cash equivalents                         502        347         570
Cash and cash equivalents,
  beginning of period                    2,338      1,991       2,092
Cash and cash equivalents,
  end of period                          2,840      2,338       2,662