HSBC subsid FY02 results

HSBC Holdings PLC
03 April 2003

The following text is the English translation of a news release issued in
Germany by HSBC Holdings plc's subsidiary.

                         HSBC TRINKAUS & BURKHARDT KGaA

                                  2002 RESULTS

The 2002 business year was marked by a deep structural and profitability crisis
in the German financial sector. German banks were heavily weighed down by a
protracted decline in financial markets activity, continuing adverse economic
conditions and bad and doubtful debts. In the context of this very difficult
environment HSBC Trinkaus & Burkhardt KGaA, which is approximately 73.5 per cent
indirectly owned by HSBC Holdings plc, can be relatively pleased with its
results for 2002, despite lower earnings.

Operating profit was EUR 57.0 million, representing a fall of 38.6 per cent
compared to operating profits in 2001. Earnings from client business, however,
were held at about the same level as those of the previous year. "This is
especially important to us", emphasised Dr Sieghardt Rometsch, Chairman of the
Managing Partners, "as our client business is the solid foundation on which the
bank is built." The decline in the overall profits of the bank is mainly due to
unsatisfactory trading profits, reflecting the turmoil in the markets.

Despite this setback, HSBC Trinkaus & Burkhardt was profitable in 2002 at both
the operating and net profit levels. At the Annual General Meeting on 3 June
2003, it will be recommended that a dividend of EUR 1.00 per share be paid. This
dividend can be paid entirely out of operating profits. However, it is not
intended to pay a bonus dividend as was paid in previous years, owing to the
absence of exceptional income in 2002. The total dividend for 2001 was EUR 2.75
per share.

Pre-tax profits fell by 66.2 per cent to EUR 50.1 million, though it should be
noted that the prior year's profits included exceptional income from the
exchange of shares in ERGO Versicherungsgruppe AG for shares of Munchener
Ruckversicherungs-Gesellschaft AG, and from the deconsolidation of S Broker AG
(formerly pulsiv AG). Net profit fell by 76.7 per cent to EUR 26.3 million.

Net income from fees and commissions, the most important element of earnings,
remained stable at EUR 195.5 million in 2002 compared to the previous year. Net
interest income after credit risk provisions fell by 12.1 per cent to EUR 66.3
million. Despite strict criteria, new credit risk provisions remained virtually
unchanged at EUR 4.1 million, compared to EUR 4.3 million in 2001. This is the
successful result of consistent, prudent credit risk management. Dealing profits
declined sharply by 72.0 per cent to EUR 15.3 million. Operating expenses were
reduced by 5.4 per cent to EUR 224.5 million, with the number of staff falling
from 1,600 to 1,578 by year-end 2002. In the financial year 2002 the cost:income
ratio was 80.6 per cent, compared with 60.9 per cent in the previous year. Net
earnings per share fell to EUR 1.01 per share, compared to EUR 4.2 per share in
2001.

Consolidated assets grew by 1.2 per cent in 2002, from EUR 11.0 billion to EUR
11.13 billion. The total capital base at year-end was 10.9 per cent of
risk-weighted assets. The core capital ratio was 7.8 per cent. The bank
therefore remains well-capitalised.

At 31 December 2002, total outstanding derivatives business was EUR 83.3 billion
(2001 : EUR 82.6 billion) with a market value of EUR 2.2 billion (2001 : EUR 1.2
billion). Aggregate market risk from trading activities rose to EUR 15.7 billion
(2001 : EUR 14.2 billion).

As a consequence of the continuing crisis on financial markets, proprietary
trading was for the first time in many years unable to cover its costs. Private
Banking was likewise unable to escape the downward trend on the exchanges and
weak economic conditions : its operating profits fell by 19.7 per cent to EUR
25.6 million. The business line of Institutional Investors, however, achieved a
3.6 per cent higher operating profit of EUR 31.6 million. Corporate Banking was
very successful, increasing its operating profit by 8.2 per cent over that of
the previous year to EUR 39.6 million. HSBC Trinkaus & Burkhardt's strategy not
to withdraw from corporate banking, in contrast to some competitors, has clearly
proven to be correct.

Private Banking, besides the traditional core business of investment in
securities, also offers comprehensive Family Office services, in particular for
family business owners. In view of poor conditions on equity markets, only very
conservatively managed portfolios succeeded in achieving investment gains over
the reporting year 2002. Overall, funds under management declined slightly.
However, there was a pleasing increase in new business won.

Of prime importance in the improvement of Corporate Banking's good market
position, apart from a strong earnings stream from traditional banking services
combined with conservative credit risk policies, were successful transactions in
Debt Capital Markets, advisory mandates and corporate finance activities. For
larger international companies within the Corporate and Institutional Banking
global client management business of the HSBC Group, HSBC Trinkaus & Burkhardt
is the exclusive gateway in Germany to one of the most capable and
best-capitalised of the world's banking and financial services organisations,
with over 8,000 branches and offices in 80 countries and territories.

Against the background of the downward trend on stock exchanges - the DAX fell
during 2002 by more than 40 per cent - the Partners are pleased with the results
of Institutional Investors business. Especially noteworthy is the positive
development of net commission income. Revenues from Fixed Income Sales actually
more than doubled. The new retail brand HSBC Trinkaus Investment Products
(www.hsbc-tip.de) appeals to the personal client base of institutional
distribution partners such as internet banks and those with extensive branch
networks. The brand draws on the bank's many years of experience in the
development of new funds, certificates and warrants.

The subsidiary HSBC Trinkaus Capital Management GmbH (TCM) performed well. It
gained market share in public investment funds. The previous year's profits were
exceeded, despite keener competitive conditions in special fund business. Total
assets under TCM's advice amounted at year-end to EUR 11.5 billion. During 2002,
TCM increased its shareholding in INKA Internationale Kapitalanlagegesellschaft
mbH through two separate transactions from 60 per cent to 100 per cent. INKA has
been fully consolidated into the HSBC Trinkaus & Burkhardt Group. At year-end
2002 INKA managed 194 funds, of which 162 were special funds and 32 were public
investment funds. The total value of funds under management at year-end 2002 was
EUR 14.2 billion, compared to EUR 16.4 billion in 2001. The subsidiary HSBC
Trinkaus Investment Managers SA, Luxemburg, managed 31 public investment funds
and one special fund, with a total value of EUR 941 million (2001 : EUR 1.1
billion).

The bank's activities on debt capital markets grew strongly in 2002. Besides
seven of its own issues, the bank lead arranged together with the HSBC Group a
total of 129 transactions with an issuance value of EUR 32.6 billion. The number
of warrants and of certificates with various structures issued in 2002 by HSBC
Trinkaus & Burkhardt rose by around 65 per cent. The bank issued 1,572 such
securities (2001 : 956), responding in particular to investors' increased demand
for Turbo warrants.

Corporate Finance made a significantly larger contribution to the bank's profits
than in the previous year. Although the market for public offerings afforded
hardly any opportunities, considerable success was instead achieved in advisory
work in connection with corporate mergers and acquisitions. In the field of
post-IPO sponsorship, the number of Designated Sponsor mandates rose from 37 to
48 at year-end 2002.

Also in the past year the bank celebrated the successful implementation, on 1
November 2002, of the new 'GEOS' securities back office processing system. With
GEOS the bank now possesses a real-time securities system which greatly
increases processing efficiency.

Its implementation extends the bank's product offering, as HSBC Trinkaus &
Burkhardt can now also take on securities processing for other banks.

2003 will confront the German banking sector with further major challenges. The
economy continues to stagnate and an easing of the current high rate of
insolvencies is nowhere in sight. The war in Iraq has brought heightened
uncertainty. Despite the difficult market conditions, the bank started the year
positively, with further gains in market share of client business. The year's
operating profits according to International Financial Reporting Standards
(IFRS) could increase by double percentage figures, if the equities markets
recover at the latest in the second half of the year, and so long as credit
provisioning costs do not significantly exceed those of the previous year. If
this goal is achieved, shareholders will share in the higher profits in line
with the bank's progressive dividend policy.

HSBC Trinkaus & Burkhardt 2002 results
Consolidated figures (EUR millions) according to IFRS

1. Balance Sheet                                                   2002            2001         % change

Due from customers                                                2,466           2,926            -15.7
Dealing assets                                                    4,353           3,183             36.7
Customer deposits                                                 5,893           5,580              5.6
Dealing liabilities                                               2,894           1,704             69.9
Shareholders' funds                                                 718             773             -7.2
Total assets                                                     11,131          11,001              1.2

2. Profit & Loss Account

Net interest income                                                70.4            79.7            -11.7
Risk provisions                                                     4.1             4.3             -4.7
Net commission income                                             195.5           197.3             -0.9
Dealing income                                                     15.3            54.6            -72.0
Operating expenses                                                224.5           237.4             -5.4
Operating profit                                                   57.0            92.9            -38.6
Pre tax profit                                                     50.1           148.3            -66.2
Net profit                                                         26.3           113.1            -76.7


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