HSBC USA Inc Results

HSBC Hldgs PLC
26 February 2001

HSBC Hldgs PLC
NEWS RELEASE 5 PART(1) OF (1)
                            
                         HSBC USA INC.
                   2000 RESULTS - HIGHLIGHTS
                               
*  Full-year net income increased by 22.4 per cent to US$568
   million from US$464 million in the full-year 1999.

*  Cash earnings^ increased 45.4 per cent to US$724 million
   from US$498 million in 1999.

*  The cost:income ratio (excluding goodwill amortisation and
   restructuring costs) for 2000 was 55.7 per cent, compared to
   45.4 per cent in 1999.

*  Tier 1 capital to risk-weighted assets was 8.4 per cent
   compared to 8.9 per cent at the end of 1999.

*  Cash earnings^ as a percentage of average common equity for
   2000 were 11.0 per cent compared to 21.8 per cent in 1999.

*  Client assets under administration were US$45.9 billion, of
   which US$30.3 billion were funds under management and US$15.6
   billion were custody accounts.

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


Financial Commentary                                                


HSBC USA Inc. recorded full-year net income of US$568 million,
up 22.4 per cent from US$464 million in 1999. Cash earnings
increased 45.4 per cent to US$724 million for 2000, compared to
US$498 million in 1999, primarily due to the acquisition of
Republic New York Corporation on 31 December 1999.

HSBC USA Inc. recorded net income of US$138 million in the
fourth quarter of 2000 compared to US$114 million for the 1999
fourth quarter. Cash earnings for the quarter were US$179
million for 2000, compared to US$122 million in the same period
of 1999.

Youssef Nasr, Chief Executive Officer of HSBC USA Inc., said:
'Our results for 2000 show good progress. We continue to focus
on cash earnings before the amortisation of goodwill. If we
were to state the 1999 results of the combined institutions on
the same basis as the 2000 results, eliminating the effects of
businesses transferred to Group affiliates, restructuring costs
and major one time gains, cash earnings in 2000 would be
approximately 12 per cent higher than in 1999.

'Following the acquisition of Republic, the year 2000 was
largely one of efficiently bringing the two institutions
together. Republic's 80 branches located in the New York City
region have been fully integrated, both from a product and
branch-platform perspective, into HSBC's retail network. Twenty
branches were consolidated with minimal customer disruption and
one additional branch is targeted for consolidation in the
first quarter of 2001. As a result of the acquisition, HSBC
Bank USA has the largest branch network in New York State with
over 430 branches serving over two million customers, making it
the third largest bank operating in the state. Additionally,
Republic's Florida and California operations provided a gateway
for HSBC into key new growth markets in the US.

'The acquisition strengthened our North American operations by
adding significant private banking, factoring, banknote and
bullion capabilities. The merger also enhanced HSBC's global
markets business in treasury and foreign exchange and
strengthened our banking presence in Mexico.'

During this year of integration and consolidation, HSBC Bank
USA emphasised customer retention and the growth of its wealth
management business. Total customer deposits throughout the 
bank were up 4.9 per cent year-to-year. Total funds under
management at year-end 2000 were US$30.3 billion up
US$3.6 billion, or 13.5 per cent from year-end 1999. Including
custody balances, year-end assets under administration totalled
US$45.9 billion. Total on and off balance sheet customer
holdings in International Private Banking (New York, Florida
and California) increased by more than 18 per cent compared to
31 December 1999. Revenues from domestic wealth management were
over US$200 million during 2000, up 18.7 per cent compared to
the same period in 1999. Life insurance revenues for full-year
2000 more than doubled compared to 1999. Aside from wealth
management, other fees and commissions remained stable period-
to-period.

HSBC Bank USA launched a comprehensive internet banking product
for personal banking customers in April 2000. By year-end, over
80,000 customers had registered for the service and the site
was receiving over 15,000 visits daily. The internet was also
used to help launch the bank's HSBC Premier product. During the
fourth quarter, HSBC Brokerage (USA) Inc. began the rollout of
online discount brokerage and it is expected that the service
will be available to all US discount brokerage customers in
2001.

Acquisition-related cost savings have been realised in most
support and administrative areas and to a lesser extent in
certain front line businesses. Approximately 75 per cent of the
targeted domestic savings as a result of the merger have been
realised and another 15 per cent have been identified. In
conjunction with the rationalisation efforts of both front and
back office operations, investments have been made in employee
compensation and benefit programmes and in operations and
technology. Year-end 2000 results included US$85 million of
restructuring costs of which US$41 million were incurred in the
fourth quarter. Consolidation of most premises and systems took
place in 2000, but it is anticipated that some further
restructuring costs will be incurred in 2001 and additional
related cost savings will be realised.

Provisions for the year were US$138 million compared to US$90
million in 1999, partly due to some deterioration in the
quality of leveraged credits which constituted a small portion
of outstanding advances. The allowance for credit losses of
over US$500 million represents coverage against non-accrual
loans of 124 per cent and is considered adequate. In
addition in light of a probable law enforcement proceeding against
Republic New York Securities Corporation (RNYSC) in connection
with the Princeton Note Matter, a matter that came to light in
1999 before the acquisition of Republic New York Corporation,
HSBC USA Inc. has taken a provision of approximately US$79
million, the amount of shareholders' equity of RNYSC, as part of the
goodwill cost of the acquisition. At the present time, it is
not possible to estimate what additional cost may be incurred
by HSBC USA Inc. as a result of the Princeton Note Matter.

As part of the integration of Republic New York Corporation
into HSBC, certain overseas operations were transferred to the
local entities of HSBC, such as the transfer of a branch in
Tokyo to the Asia-Pacific operations of HSBC.  More transfers
are expected to occur in 2001.

During the fourth quarter, HSBC USA Inc. distributed its 49 per
cent interest in HSBC Republic Holdings (Luxembourg) SA (HRH)
from its subsidiary, HSBC Bank USA to its parent, HSBC North
America, Inc. The distribution, in the form of a special
dividend in the amount of US$2.9 billion, included its
investment in HSBC Investments (Bahamas) Limited in
addition to the US$2.5 billion investment in HRH. The transfer
was the first step in an internal international reorganisation
of the HSBC Group's global private banking operations under a
European holding company, with the intent of aligning legal
ownership and functional management.

As a result of the special dividend, HSBC USA Inc.'s capital
ratio, balance sheet, income statement and other financial
statements have been restated as if it had not owned these
investments from the date of the acquisition, 31 December 1999.
The special dividend reduced the tier 1 capital of HSBC USA
Inc. and HSBC Bank USA by US$2.9 billion; however, net total
regulatory capital was reduced by only US$0.4 billion because
the US$2.5 billion ownership interest in HRH has previously
been adjusted when computing the total capital ratio for
regulatory capital purposes. Following this transaction, common
equity was US$6.8 billion at 31 December 2000 compared to
US$6.7 billion at 31 December 1999. The ratio of tier 1 capital
to risk-weighted assets was 8.4 per cent compared to 8.9 per
cent at 31 December 1999. The ratio of total capital to risk-
weighted assets was 13.6 per cent compared to 15.1 per cent at
31 December 1999.

The effect on the income statement was to reduce net income
for the full year by US$74 million, from US$642 million to the
US$568 million reported. The return on average common equity
for full-year 2000 was 8.2 per cent compared to 20.3 per cent
last year. The ratio of cash earnings to common equity was 11.0
per cent compared to 21.8 per cent at 31 December 1999.


About HSBC Bank USA

HSBC Bank USA is a leading financial services organisation with
combined assets of the bank and its US holding company, HSBC
USA Inc., of US$83.0 billion. The organisation is the third
largest depository institution and has the most extensive
branch network in New York State. In addition to having more
than 430 branches throughout New York, the institution has
seven branches in Florida, two in Pennsylvania, three in
California and 11 in Panama. HSBC USA Inc. is the 11th 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 79 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             Year ended      
Figures in US$ millions   31 Dec00     31 Dec99    31 Dec00    31 Dec99       
                                          
                                                                        
Net income                     138          114         568         464 
                                                                        
Cash earnings^                 179          122         724         498 
                                                                        
Performance ratios (%)                                                  
Cash earnings as a                                                      
  percentage of average                                                 
  common equity               10.7         19.6        11.0        21.8 
                                                                        
Cost:income ratio
  (excluding goodwill                                                 
  amortisation and                                                      
  restructuring costs)        54.1         42.9        55.7        45.4 
Staff numbers (full-time                                                
  equivalents)                                       14,639      14,440 
                                                                        
Average balances                                                        
Loans                       39,942       23,548      38,966      23,385 
Earning assets              74,512       32,509      74,313      31,991 
Total assets                82,963       34,794      82,789      34,230 
Deposits                    55,913       27,199      55,023      26,636 
Common equity                6,682        2,458       6,590       2,283 
                                                                        
Net yields on total assets                                              
  (tax equivalent basis) (%)   2.5          3.5         2.6         3.6 
                                                                         
Assets under administration                                             
Funds under management                               30,278      26,667 
Custody accounts                                     15,616      16,011 
Total assets under                                                      
  administration                                     45,894      42,678 
                                                                         
Credit information                                                       
Non-accruing loans                                      423         344 
Net charge offs                                         239         100 
Allowance available for                                                 
  credit losses                                                          
-Balance at end of period                               525         638 
-As a percentage of                                                      
  non-accruing loans                                  124.1%      185.7%
-As a percentage of loans                                               
  outstanding                                           1.3%        1.7%
                                                                              
Capital (at end of period)                                                   
Common equity                                         6,843       6,728 
As a percentage of total                                                
  assets                                                8.2%        7.7%
                                                                        
Capital ratios (%)                                                      
Leverage ratio                                          5.7        14.5 
Tier 1 capital to risk-                                                 
  weighted assets                                       8.4         8.9 
Total capital to risk-                                                  
  weighted assets                                      13.6        15.1 

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

Consolidated Statement of Income                                        

                                         Quarter ended  Quarter ended 
Figures in US$ thousands                   31 Dec 2000    31 Dec 1999  
                                                                 
Interest income
Loans                                          800,559        461,817 
Securities                                     392,228         51,471 
Trading assets                                  50,661         14,803 
Other short-term investments                   120,903         60,618 
Total interest income                        1,364,351        588,709 
                                                                 
Interest expense                                                 
Deposits                                       622,627        227,420 
Short-term borrowings                          114,924         28,528 
Long-term debt                                 102,947         30,550 
Total interest expense                         840,498        286,498 
                                                                 
Net interest income                            523,853        302,211 
                                                 
Provision for credit losses                     30,992         22,500 
Net interest income, after                                       
  provision for credit losses                  492,861        279,711 
                                                                 
Other operating income                                           
Trust income                                    21,587         13,549 
Service charges                                 42,741         35,684 
Mortgage banking revenue                         9,581          4,379 
Other fees and commissions                      74,945         44,624 
Trading revenues                                25,559          2,737 
Security gains                                  18,396          2,857 
Interest on Brazilian tax                                        
  settlement                                         -         13,143 
Other income                                    19,587          8,391 
Total other operating income                   212,396        125,364 
                                                                 
Total income from operations                   705,257        405,075 
                                                                 
Other operating expenses                                         
Salaries and employee benefits                 237,617        101,913 
Occupancy expense, net                          40,686         21,635 
Other expenses                                 161,204         86,615 
Operating expenses before goodwill                               
  amortisation                                 439,507        210,163 
Goodwill amortisation                          483,791        217,143 
Income before taxes                            221,466        187,932  
Income tax expense                              83,048         74,050 
Net income                                     138,418        113,882 
                                                                
Interest income
Loans                                        3,072,830      1,841,396 
Securities                                   1,580,606        214,480 
Trading assets                                 140,455         50,627 
Other short-term investments                   523,693        213,536 
Total interest income                        5,317,584      2,320,039 
                                                                   
Interest expense                                                   
Deposits                                     2,333,503        852,875 
Short-term borrowings                          444,718        129,604 
Long-term debt                                 420,298        111,654 
Total interest expense                       3,198,519      1,094,133 
                                                                   
Net interest income                          2,119,065      1,225,906 
Provision for credit losses                    137,600         90,000 
Net interest income, after provision for                           
  credit losses                              1,981,465      1,135,906 
                                                                   
Other operating income                                             
Trust income                                    84,906         52,212 
Service charges                                172,257        128,598 
Mortgage banking revenue                        32,484         30,455 
Other fees and commissions                     300,388        167,595 
Trading revenues                               140,192         10,014 
Security gains                                  28,839         10,098 
Interest on Brazilian tax settlement                 -         13,143 
Other income                                    73,372         51,854 
Total other operating income                   832,438        463,969 
                                                                   
Total income from operations                 2,813,903      1,599,875 
                                                                   
Other operating expenses                                           
Salaries and employee benefits                 979,638        421,334 
Occupancy expense, net                         168,950         88,950 
Other expenses                                 581,149        284,251 
Operating expenses before goodwill                                 
  amortisation                               1,729,737        794,535 
Goodwill amortisation                          176,162         33,328 
Total operating expenses                     1,905,899        827,863 
                                                                   
Income before taxes                            908,004        772,012
Income tax expense                             340,500        308,300 
                                                                   
Net income                                     567,504        463,712

Consolidated Balance Sheet                                      

                                         
Figures in US$ thousands                   At 31 Dec00    At 31 Dec99 
                                                                  
Assets                                                            
Cash and due from banks                      1,860,713      1,959,213 
Interest bearing deposits with banks         5,129,490      4,137,571 
Federal funds sold and securities                                 
  purchased under resale agreements          1,895,492      2,318,361 
Trading assets                               5,770,972      4,515,009 
Securities available for sale               17,336,832     24,617,319 
Securities held to maturity                  4,260,492      4,770,087 
                                                                  
Loans                                       40,417,847     38,330,464 
Less - allowance for credit losses             524,984        637,995 
Loans, net                                  39,892,863     37,692,469 
                                                                  
Premises and equipment                         787,721        744,581 
Accrued interest receivable                    785,287        696,539 
Equity investments                              55,596         47,931 
Goodwill and other acquisition           
  intangibles                                3,233,133      3,307,147 
Other assets                                 2,023,221      2,446,674 
Total assets                                83,031,812     87,252,901 
                                                                    
Liabilities                                                       
Deposits in domestic offices                                      
- Non-interest bearing                       5,114,668      5,979,189 
- Interest bearing                          30,631,511     29,393,957 
Deposits in foreign offices                                       
- Non-interest bearing                         282,737        187,099 
- Interest bearing                          20,004,300     20,864,209 
Total deposits                              56,033,216     56,424,454 
                                                                  
Trading account liabilities                  2,766,825      2,437,315 
Short-term borrowings                        8,562,363      5,210,708 
Interest, taxes and other liabilities        3,230,103      2,976,590 
Payable to shareholders of acquired                               
  company                                            -      7,091,209 
Subordinated long-term debt and                                   
  perpetual capital notes                    3,027,014      3,427,649 
Guaranteed mandatorily redeemable                                 
  securities                                   711,737        710,259 
Other long-term debt                         1,357,904      1,747,131 
Total liabilities                           75,689,162     80,025,315 
                                                                    
Shareholders' equity                                              
Preferred stock                                500,000        500,000 
Common shareholders' equity                                       
- Common stock                                       4              4 
- Capital surplus                            6,114,484      6,106,538 
- Retained earnings                            611,343        671,578 
- Accumulated other comprehensive                                 
  income (loss)                                116,819        (50,534) 
Total common shareholders' equity            6,842,650      6,727,586 
Total shareholders' equity                   7,342,650      7,227,586 
                                                                  
Total liabilities and shareholders'                               
  equity                                    83,031,812     87,252,901