HSBC USA Inc 3Q & 9Mths Rslts

HSBC Holdings PLC
14 November 2001



                                HSBC USA INC.
                          2001 Third Quarter results

* Net income in the third quarter of 2001 increased by 28 per cent to US$184
million compared to US$144 million in the third quarter of 2000 before the
effect of a provision for the Princeton Note Matter ('Princeton'). On a GAAP
basis, HSBC USA Inc. reported a loss of US$167 million, after the provision
for Princeton, for the third quarter.

* Cash earnings(^) in the third quarter were US$225 million before the
provision for Princeton, compared to US$183 million for the same period in
2000.

* The cost: income ratio (excluding goodwill amortisation, restructuring costs
and the provision for Princeton) for the third quarter of 2001 was 52.7 per
cent, compared to 54.0 per cent in the third quarter of 2000.

* Tier 1 capital to risk-weighted assets was 7.9 per cent at 30 September
2001, compared to 8.3 per cent at 30 September 2000.

* Cash earnings(^) as a percentage of average common equity for the third
quarter of 2001 were 12.8 per cent before the provision for Princeton,
compared to 11.2 per cent during the third quarter of 2000.

* Client assets under administration at 30 September 2001 were US$48.0
billion, of which US$30.8 billion were funds under management and US$17.2
billion were custody accounts.

    (^) Cash earnings are primarily net income after preferred dividends and
    after adding back goodwill amortisation.

Note: Figures for 2000 have been restated to exclude investments in entities
transferred to HSBC North America Inc. during 2001 and 2000.

Note: Based on progress made in the previously-announced discussions to
resolve many of the pending civil litigations and regulatory and criminal
investigations involving Republic New York Securities Corporation (RNYSC),
collectively referred to as the Princeton Note Matter, a charge of US$575
million before tax was taken by the Company in the third quarter to reflect an
anticipated resolution. Princeton came to light prior to HSBC's acquisition of
Republic New York Corporation, RNYSC's parent, in December, 1999. Combining
the provision taken in a prior period with that taken in the third quarter,
the after tax cost to date of Princeton to the Company is within the range of
the price reduction taken by companies controlled by the late Mr. Edmond Safra
at the time of the acquisition by HSBC.

Financial Commentary

HSBC USA Inc. reported net income of US$184 million for the quarter ended 30
September 2001 before a provision for Princeton, an increase of 28 per cent
from US$144 million for the quarter ended 30 September 2000; cash earnings for
the quarter, on the same basis, increased to US$225 million from US$183
million for the 2000 third quarter. On a GAAP basis, the Company reported a
loss of US$167 million, after the provision for Princeton, for the quarter
ended 30 September 2001.

For the nine months ended 30 September 2001, the company recorded net income
of US$553 million before a provision for Princeton, an increase of 27 per cent
from US$434 million in the first nine months of 2000. On the same basis, cash
earnings for the first nine months of 2001 were US$676 million, up from US$550
million for the comparable period in 2000.

Youssef A Nasr, Chief Executive Officer of HSBC USA Inc., said: '2001 has been
a year of sad and sobering changes. On September 11, we experienced an
unthinkable tragedy, one that few of us could ever have imagined. The banking
industry was called on by the nation to be a model of stability and it was. We
lost a branch at Five World Trade Center, but fortunately none of our
employees was killed or injured.

'HSBC has always been an organisation committed to providing superior customer
service in the communities that we serve. Following the tragic events of
September 11, we are helping to rebuild the New York community on a number of
fronts.

'In the days following the tragedy, HSBC USA announced a matching gift program
with the American Red Cross. At the HSBC Holdings level, significant
contributions were made to certain charities and agencies. Our branch network
assisted with the collection and processing of donations for various relief
organisations that found themselves overwhelmed with the volume of
contributions coming in. Other assistance included direct grants to employees
in need, suspension of various fees for customers in the affected areas and
the provision of temporary office space for 235 employees of one of our
customers who had their offices in the World Trade Center.

'In addition, HSBC established a US$200 million fund, available for loans to
small businesses that were either directly or indirectly affected by the World
Trade Center tragedy. For the rest of this year, HSBC will offer these
companies seeking loans of up to US$2 million a choice of either a
particularly attractive fixed rate loan or a variable rate loan at prime minus
2 per cent. The value of the various disaster relief benefits to potential
program participants will probably approach US$10 million.

'The Federal Reserve cut interest rates on ten separate occasions in an
attempt to keep the country from entering a recession. Given this challenging
environment, we are pleased with the results that we reported today. Our focus
remains on cash earnings and for the nine months ended 30 September 2001,
before the provision for the Princeton Note Matter, cash earnings of US$676
million represented a 23 per cent increase from the 2000 comparable period.
Our commercial business did well and our treasury business showed the results
of previous investments.'

Total assets were US$87.6 billion compared to US$84.7 billion at 30 September
2000 and US$83.0 billion at 31 December 2000. Total deposits were US$56.8
billion at 30 September 2001, up 2 per cent from US$55.7 billion at 30
September 2000 and compared to US$56.0 billion at 31 December 2000. Total
loans at 30 September 2001 were US$42.9 billion, up 8 per cent from US$39.8
billion at 30 September 2000 and compared to US$40.4 billion at 31 December
2000. Residential mortgage lending saw a significant increase in volume as a
result of the high level of refinancing activity as interest rates steadily
moved lower during the first nine months of 2001. HSBC Mortgage Corporation, a
subsidiary of HSBC Bank USA, with more than 300,000 customers, originated
US$10.5 billion in mortgages through the first nine months of 2001, an
increase of 128 per cent from US$4.6 billion in mortgages funded during the
first nine months of 2000. Approximately 40 per cent of this volume will be
held in the bank's loan portfolio, with the remaining volume sold while
retaining the servicing.

For the nine months ended 30 September 2001, net interest income showed growth
of US$75 million, or 5 per cent, to US$1.7 billion. In addition to the benefit
of loan and core deposit growth, the previously mentioned short-term rate cuts
have led to wider interest margins in certain commercial businesses, the
residential mortgage business and treasury.

For the first nine months of 2001, other operating income was US$836 million,
an increase of US$216 million, or 35 per cent from US$620 million for the
first nine months of 2000.

Securities gains of US$147 million were realized from securities sales to
adjust to interest rate changes and to reconfigure exposure to residential
mortgages. A one-time gain of US$19 million was recorded in the first quarter
from the sale of shares of the Canary Wharf development in London. Wealth
management and insurance, loan and bankcard fees and service charges were all
strong during the first nine months of 2001.

Fee income from domestic wealth management was US$158 million during the first
nine months of 2001, an increase of 14 per cent compared to the same period in
2000. Life insurance revenues for the first nine months of 2001 were US$22
million, an increase of 47 per cent from US$15 million for the first nine
months of 2000. The World Trade Center disaster has had little direct effect
so far on revenues and is estimated to be between US$2 million and US$3
million, including lower personal banking charges, bankcard fees and brokerage
fees.

Operating expenses for the first nine months of 2001, excluding the provision
for Princeton, increased slightly to US$1.5 billion from US$1.4 billion in the
comparable period of last year. Excluding treasury and general incentive
compensation tied to performance as well as the provision for Princeton,
operating expenses were flat year to year. All restructuring relating to the
acquisition of Republic New York Corporation from a customer perspective is
complete. Certain back office systems conversions are in the final stages.
During the third quarter, US$3 million in specific charges for World Trade
Center related expenses were recognized, including insurance policy
deductibles and contributions. There will be additional costs in the fourth
and later quarters; however, they are not expected to be material.

During the first nine months of 2001, credit quality remained relatively
stable, notwithstanding a more volatile business and credit environment.
However, it is still too early to determine clearly the effect which the
events of 11 September and the general economic slowdown will have on the
credit portfolio. Credit provisions for the first nine months of 2001 were
US$143 million which exceeded charge-offs of US$108 million for the same
period. The ratio of allowance available for credit losses to non-accruing
loans strengthened from 124.1 per cent at 31 December 2000 to 137.1 per cent
at 30 September 2001.

Common equity was US$6.7 billion at 30 September 2001 compared to US$6.6
billion at 30 September 2000. The ratio of tier 1 capital to risk-weighted
assets was 7.9 per cent compared to 8.3 per cent at 30 September 2000. The
ratio of total capital to risk-weighted assets was 12.6 per cent compared to
13.8 per cent at 30 September 2000.

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 September 2001, more than 239,000 customers had
registered for the service, up from approximately 80,000 at year-end 2000. The
HSBC Bank USA web site, us.hsbc.com, where customers can apply for accounts,
conduct financial planning and link to online services, receives over 22,000
visits daily.

Based on progress made in the previously-announced discussions to resolve many
of the pending civil litigations and regulatory and criminal investigations
involving Republic New York Securities Corporation (RNYSC), collectively
referred to as the Princeton Note Matter, a charge of US $575 million before
tax was taken by the Company in the third quarter to reflect an anticipated
resolution. There can be no assurance, however, that such a resolution will be
reached. The Princeton Note Matter came to light prior to HSBC's acquisition
of Republic New York Corporation, RNYSC's parent, in December, 1999. Combining
the provision taken in a prior period with that taken in the third quarter,
the after tax cost to date of the Princeton Note Matter to the Company is
within the range of the price reduction taken by companies controlled by the
late Mr. Edmond Safra at the time of the acquisition by HSBC.

About HSBC Bank USA

HSBC Bank USA is a leading financial services organization with combined
assets of the bank and its US holding company, HSBC USA Inc., of US$87.6
billion. The organization is the third largest depository institution and has
the most extensive branch network in New York State. In addition to having
more than 420 branches throughout New York, the institution has eight branches
in Florida, two in Pennsylvania, three in California and 17 in Panama. HSBC
USA Inc. is the eleventh largest US holding company in total assets and is an
indirectly-held, wholly-owned subsidiary of HSBC Holdings plc (NYSE: HBC),
which is headquartered in London. The HSBC Group has some 6,500 offices in 78
countries and territories in Europe, the Asia-Pacific region, the Americas,
the Middle East and Africa. For more information about HSBC Bank USA and its
products and services visit www.us.hsbc.com.

Summary
                       Quarter ended                      Nine months ended
Figures in           30Sep001    30Sep00 (^)(^)           30Sep01  30Sep00(^)(^)
US$ millions   

               Excluding         As                Excluding         As
               Princeton   reported                Princeton   reported

Net income         184       (167 )      144           553        202        434
(loss)

Cash earnings      225       (126 )      183           676        325        550
(^)

Performance
ratios (%)

Cash earnings
as a
percentage of
*Average          12.8       (7.2 )     11.2          13.1        6.3       11.2
common equity
Cost:income
ratio
*(excluding
goodwill
amortisation,
 restructuring
costs, and                   52.7       54.0                     52.3       56.0
 Princeton
Note Matter)
Staff numbers
(full-time
 equivalents)                                                  14,335     14,451
Average
balances
Loans                      42,209     39,077                   41,274     38,638
Earning assets             78,529     74,302                   77,754     74,246
Total assets               86,464     82,690                   85,734     82,727
Deposits                   57,347     55,243                   57,760     54,733
Common equity               6,898      6,512                    6,858      6,551

Net yields on
total assets
*(tax                         2.6        2.6                      2.6        2.6
equivalent
basis) (%)

Assets under
administration
Funds under                                                    30,842     30,932
management
Custody                                                        17,174     16,334
accounts
Total assets                                                   48,016     47,266
under
administration

Credit
information
Non-accruing                                                      394        299
loans
Net charge                                                        108        174
offs
Allowance
available for
credit losses
- Balance at                                                      540        558
end of period
- As a percentage of                                            137.1 %    186.7
%
non-accruing loans
- As a percentage of                                             1.26 %     1.40
%
loans outstanding

Capital (at end of
period)
Common equity                                                   6,650      6,612
As a percentage of                                                7.6 %      7.8
%
total assets

Capital ratios (%)
Leverage ratio                                                    5.7        5.6
Tier 1 capital to                                                 7.9        8.3
risk-weighted assets
Total capital to                                                 12.6       13.8
risk-weighted assets

(^) Cash earnings (losses) are net income (losses) after preferred dividends,
after adding back goodwill amortisation and expense associated with HSBC Group
share option plans.

(^)(^) Restated to exclude investments in entities transferred to HSBC North
America Inc. during 2001 and 2000.

Consolidated Statement of Income
                                                     Quarter       Quarter
                                                       ended         ended
Figures in US$ thousands                             30Sep01     30Sep00(^)(^)

Interest income

Loans                                                729,316       783,359

Securities                                           296,260       402,246

Trading assets                                        52,670        37,656

Other short-term investments                          73,080       131,183

Total interest income                              1,151,326     1,354,444

Interest expense

Deposits                                             440,769       604,368

Short-term borrowings                                 74,156       109,591

Long-term debt                                        81,750       101,083

Total interest expense                               596,675       815,042

Net interest income                                  554,651       539,402

Provision for credit losses                           47,500        50,608

Net interest income, after provision for credit      507,151       488,794
losses

Other operating income

Trust income                                          20,517        20,776

Service charges                                       47,738        42,834

Mortgage banking revenue                               3,293         7,739

Other fees and commissions                            86,753        71,770

Trading revenues                                      73,793        30,103

Security gains                                        20,891         9,081

Other income                                          22,817        29,262

Total other operating income                         275,802       211,565

Total income from operations                         782,953       700,359


Other operating expenses

Salaries and employee benefits                       243,464       241,090

Occupancy expense, net                                40,665        41,412

Other expenses                                       153,730       145,457

Provision for Princeton Note Matter                  575,000             -

Operating expenses before goodwill amortisation    1,012,859       427,959

Goodwill amortisation                                 43,803        44,417

Total other operating expenses                     1,056,662       472,376

Income (loss) before taxes and cumulative effect
of accounting change                               (273,709)       227,983

Applicable income tax expense (credit)             (106,500)        84,406

Income (loss) before cumulative effect of
accounting  change                                 (167,209)       143,577

Cumulative effect of accounting change-
implementation of FAS 133                                  -             -

Net income (loss)                                  (167,209)       143,577

(^)(^) Restated to exclude investments in entities transferred to HSBC North
America Inc. during 2001 and 2000.

Consolidated Statement of Income
                                                Nine months   Nine months

                                                      ended         ended
Figures in US$ thousands                          30Sep01       30Sep00 (^) (^)
                                                                          
Interest income
Loans                                             2,267,117     2,272,272
Securities                                        1,012,144     1,188,379
Trading assets                                      175,797        89,794
Other short-term investments                        288,113       402,789
Total interest income                             3,743,171     3,953,234
Interest expense
Deposits                                          1,532,997     1,711,258
Short-term borrowings                               283,029       329,794
Long-term debt                                      256,925       317,352
Total interest expense                            2,072,951     2,358,404

Net interest income                               1,670,220     1,594,830
Provision for credit losses                         143,050       106,607
Net interest income, after provision for credit   1,527,170     1,488,223
losses

Other operating income
Trust income                                         65,360        63,319
Service charges                                     139,177       129,515
Mortgage banking revenue                             22,907        22,903
Other fees and commissions                          245,762       225,444
Trading revenues                                    176,036       114,633
Security gains                                      146,671        10,443
Other income                                         40,520        53,785
Total other operating income                        836,433       620,042
Total income from operations                      2,363,603     2,108,265

Other operating expenses
Salaries and employee benefits                      728,053       738,269
Occupancy expense, net                              116,865       127,004
Other expenses                                      478,849       420,461
Provision for Princeton Note Matter                 575,000             -
Operating expenses before goodwill amortisation   1,898,767     1,285,734
Goodwill amortisation                               133,062       131,878
Total other operating expenses                    2,031,829     1,417,612
Income before taxes and cumulative effect of
 accounting change                                  331,774       690,653
Applicable income tax expense                       129,700       257,005
Income before cumulative effect of accounting
change                                              202,074       433,648
Cumulative effect of accounting change-
 implementation of FAS 133                            (451)             -

Net income                                          201,623       433,648



        (^)(^) Restated to exclude investments in entities transferred to HSBC
        North America Inc. during 2001 and 2000.

Consolidated Balance Sheet


Figures in US$ thousands         At 30Sep01 At 31Dec00(^)(^)  At 30Sep00(^)(^)

Assets
Cash and due from banks            2,078,353      1,860,713         2,029,271
Interest bearing deposits with     4,148,466      5,129,490         6,503,416
banks
Federal funds sold and
securities purchased
 Under resale agreements           3,360,544      1,895,492         2,629,177
Trading assets                     8,764,132      5,770,972         5,275,971
Securities available for sale     15,190,148     17,336,832        17,304,661
Securities held to maturity        4,596,627      4,260,492         4,365,820
Loans                             42,930,129     40,417,847        39,783,583
Less - allowance for credit          540,252        524,984           558,337
losses
Loans, net                        42,389,877     39,892,863        39,225,246

Premises and equipment               791,674        777,610           742,236
Accrued interest receivable          488,912        785,286           811,531
Equity investments                   268,377         55,596            52,825
Goodwill and other acquisition     2,972,439      3,229,479         3,254,459
intangibles
Other assets                       2,567,567      2,040,325         2,485,011

Total assets                      87,617,116     83,035,150        84,679,624

Liabilities
Deposits in domestic offices
- Non-interest bearing             4,726,970      5,114,668         5,626,006
- Interest bearing                32,267,138     30,631,511        29,641,450
Deposits in foreign offices
- Non-interest bearing               334,236        282,737           247,697
- Interest bearing                19,482,903     20,013,588        20,229,871
Total deposits                    56,811,247     56,042,504        55,745,024

Trading account liabilities        4,056,443      2,766,825         2,271,855
Short-term borrowings              9,602,959      8,562,363        10,417,986
Interest, taxes and other          5,093,271      3,232,918         3,430,779
liabilities
Subordinated long-term debt and    2,979,120      3,027,014         3,323,624
perpetual capital notes
Guaranteed mandatorily               735,605        711,737           711,368
redeemable securities
Other long-term debt               1,188,194      1,357,904         1,666,760
Total liabilities                 80,466,839     75,701,265        77,567,396

Shareholders' equity
Preferred stock                      500,000        500,000           500,000
Common shareholder's equity
- Common stock                             4              4                 4
- Capital surplus                  6,028,804      6,104,264         6,101,130
- Retained earnings                  570,248        612,798           484,406
- Accumulated other                   51,221        116,819            26,688
comprehensive income
Total common shareholders'         6,650,277      6,833,885         6,612,228
equity
Total shareholders' equity         7,150,277      7,333,885         7,112,228
Total liabilities and             87,617,116     83,035,150        84,679,624
shareholders' equity

(^)(^) Restated to exclude investments in entities transferred to HSBC North
America Inc. during 2001 and 2000.