No1 HSBC Final Results (2/2)

HSBC Holdings PLC
4 March 2002

PART 2


7. Capital resources

Figures in US$m                                                               At 31Dec01               At 31Dec00

Capital ratios (%)

Total capital ratio                                                                 13.0                     13.3

Tier 1 capital ratio                                                                 9.0                      9.0

Composition of capital

Figures in US$m

Tier 1:
 Shareholders' funds                                                              45,979                   45,570
 Minority interests                                                                3,515                    4,419
 Innovative tier 1 securities                                                      3,467                    3,512
 Less: property revaluation reserves                                              (2,271 )                 (2,611 )
  : goodwill capitalised and intangible assets                                   (14,989 )                (15,597 )
  : own shares held ^                                                               (628 )                   (673 )
Total qualifying tier 1 capital                                                   35,073                   34,620


Tier 2:
 Property revaluation reserves                                                     2,271                    2,611
 General provisions                                                                2,091                    2,132
 Perpetual subordinated debt                                                       3,338                    3,531
 Term subordinated debt                                                            9,912                   10,224
 Minority interests in tier 2 capital                                                693                      697
Total qualifying tier 2 capital                                                   18,305                   19,195

Unconsolidated investments                                                        (1,781 )                 (1,463 )
Investments in other banks                                                          (627 )                 (1,241 )
Other deductions                                                                    (116 )                   (147 )
Total capital                                                                     50,854                   50,964

Total risk-weighted assets                                                       391,478                  383,687



The above figures were computed in accordance with the EU Banking Consolidation
Directive.

 ^  This principally reflects shares held in trust to fulfil the Group's
obligations under employee share option plans.

8. Foreign exchange exposure

The Group's foreign exchange exposure comprises trading exposures and structural
foreign currency translation exposure. Foreign exchange trading exposure
comprises those which arise from foreign exchange dealing within Treasury and
currency exposures originated by commercial banking businesses in HSBC. The
latter are transferred to local treasury units where they are managed, together
with exposures which result from dealing activities, within limits approved by
the Group Executive Committee.

The Group's structural foreign currency translation exposures are represented by
the net asset value of the holding company's foreign currency equity and
subordinated debt investments in its subsidiaries, branches and associated
undertakings. Gains or losses on structural foreign currency exposures are taken
to reserves. The Group's structural foreign currency exposures are managed with
the primary objective of ensuring, where practical, that the Group's and
individual banking subsidiaries' tier 1 capital ratios are protected from the
effect of changes in exchange rates.

9. Contingent liabilities and commitments

The total contract amounts of contingent liabilities and commitments which, at
31 December 2001, were US$242,504 million (31 December 2000: US$221,858 million)
are credit-related instruments which include acceptances, letters of credit,
guarantees and commitments to extend credit. The contractual amounts represent
the amounts at risk should the contract be fully drawn upon and the client
default. Since a significant portion of guarantees and commitments are expected
to expire without being drawn upon, the total of the contract amounts is not
representative of future liquidity requirements.

10. Reconciliation of operating profit to net cash flow from operating activities

                                                                                 Year ended              Year ended
Figures in US$m                                                                     31Dec01                 31Dec00

Operating profit                                                                      7,153                   9,447
Change in prepayments and accrued income                                                452                    (772 )
Change in accruals and deferred income                                               (2,207 )                 1,863
Interest on finance leases and similar hire purchase contracts                           27                      26
Interest on subordinated loan capital                                                 1,074                   1,216
Depreciation and amortisation                                                         1,933                   1,591
Amortisation of discounts and premiums                                                 (640 )                  (727 )
Provisions for bad and doubtful debts                                                 2,037                     932
Loans written off net of recoveries                                                  (1,893 )                (1,653 )
Provisions for liabilities and charges                                                1,229                     723
Provisions utilised                                                                    (542 )                  (510 )
Amounts written off fixed asset investments                                             125                      36
Net cash inflow from trading activities                                               8,748                  12,172


Change in items in the course of collection from other banks                          1,009                     656
Change in treasury bills and other eligible bills                                     2,200                    (826 )
Change in loans and advances to banks                                                19,601                     838
Change in loans and advances to customers                                           (16,072 )               (10,265 )
Change in other securities                                                          (20,307 )               (16,006 )
Change in other assets                                                               (1,856 )                (1,858 )
Change in deposits by banks                                                          (8,546 )                (2,333 )
Change in customer accounts                                                          19,799                  42,153
Change in items in the course of transmission to other banks                           (827 )                (1,576 )
Change in debt securities in issue                                                   (1,437 )               (17,019 )
Change in other liabilities                                                           9,179                   7,004
Elimination of exchange differences ^                                                 1,424                   2,283

Net cash inflow from operating activities                                            12,915                  15,223

 ^  Adjustment to bring changes between opening and closing balance sheet
amounts to average rates. This is not done on a line-by-line basis, as it cannot
be determined without unreasonable expense.

11. Bad and doubtful debts
                              2001 Half-year ended                                2000 Half-year ended
By category:                   30Jun              31Dec           2001          30Jun              31Dec         2000

Loans and advances
 to customers

- specific charge:
 new provisions                1,126              1,544          2,670            995              1,298        2,293
 releases and
 recoveries                     (676 )             (530 )       (1,206 )         (493 )             (590 )     (1,083 )
                                 450              1,014          1,464            502                708        1,210
- net general
 charge/(release):
 Argentina                         -                600            600              -                  -            -
 special general
 provision for
 Asian risk                        -                  -              -           (116 )              (58 )       (174 )
 other                            (9 )              (18 )          (27 )          (16 )              (90 )       (106 )

                                  (9 )              582            573           (132 )             (148 )       (280 )
Customer bad and
 doubtful debt
 charge                          441              1,596          2,037            370                560          930

Loans and advances
 to banks

- net specific
 (release)/charge                  -                  -              -             (2 )                4            2

Total bad and
 doubtful debt
 charge                          441              1,596          2,037            368                564          932


12. Analysis of fees and commissions receivable and payable
                                        2001 Half-year ended                      2000 Half-year ended
Figures in US$m                         30Jun             31Dec       2001         30Jun             31Dec       2000

Account services                          814               806      1,620           744               793      1,537
Credit facilities                         311               317        628           308               305        613
Remittances                               121               125        246           109               116        225
Cards                                     537               579      1,116           509               561      1,070
Imports/Exports                           257               267        524           262               278        540
Underwriting                               86                49        135            88               107        195
Insurance                                 337               331        668           276               294        570
Mortgage servicing rights                  40                38         78            35                34         69
Trust income                               58                56        114            90                95        185
Broking income                            499               429        928           686               521      1,207
Global custody                            158               150        308           147               277        424
Maintenance income on operating
 leases                                    84                81        165            91                85        176
Other                                   1,130             1,096      2,226           815               951      1,766
Total fees and commissions
 receivable                             4,432             4,324      8,756         4,160             4,417      8,577
Less: fees payable                       (664 )            (622 )   (1,286 )        (601 )            (665 )   (1,266 )

Net fees and commissions                3,768             3,702      7,470         3,559             3,752      7,311


13. Geographical distribution of results
HSBC European Operations
                                 2001 Half-year ended                            2000 Half-year ended
Figures in US$m                   30Jun          31Dec           2001            30Jun           31Dec           2000
Net interest income               2,635          2,928          5,563            2,365           2,623          4,988

Dividend income                      58             58            116               51              33             84
Net fees and commissions          2,166          2,044          4,210            1,957           2,143          4,100
Dealing profits                     341            367            708              420             367            787
Other income                        473            549          1,022              420             531            951
Other operating income            3,038          3,018          6,056            2,848           3,074          5,922

Operating income                  5,673          5,946         11,619            5,213           5,697         10,910

Staff costs                      (2,055 )       (2,172 )       (4,227 )         (1,813 )        (2,049 )       (3,862 )
Premises and equipment             (387 )         (399 )         (786 )           (280 )          (371 )         (651 )
Other                              (737 )         (882 )       (1,619 )           (581 )          (793 )       (1,374 )
Depreciation                       (324 )         (332 )         (656 )           (292 )          (339 )         (631 )
Goodwill amortisation              (319 )         (313 )         (632 )            (89 )          (259 )         (348 )
Operating expenses               (3,822 )       (4,098 )       (7,920 )         (3,055 )        (3,811 )       (6,866 )

Operating profit before
 provisions                       1,851          1,848          3,699            2,158           1,886          4,044

Customers:
- new specific provisions          (328 )         (474 )         (802 )           (271 )          (336 )         (607 )
- releases and recoveries           175            150            325              120             184            304
                                   (153 )         (324 )         (477 )           (151 )          (152 )         (303 )
- net general release/               25             11             36              (18 )           (25 )          (43 )
(charge)
Bad and doubtful debt              (128 )         (313 )         (441 )           (169 )          (177 )         (346 )
charge
Banks:
- net specific release/               -              -              -                2              (4 )           (2 )
(charge)
Total bad and doubtful
 debt charge                       (128 )         (313 )         (441 )           (167 )          (181 )         (348 )

Provisions for contingent
 liabilities and                     (9 )          (21 )          (30 )            (45 )           (22 )          (67 )
commitments

Amounts written off
 fixed asset investments            (27 )          (63 )          (90 )             (9 )           (14 )          (23 )

Operating profit                  1,687          1,451          3,138            1,937           1,669          3,606

Income from associated
 undertakings                       (19 )          (18 )          (37 )            (37 )           (59 )          (96 )

Investment and fixed asset
 disposal gains                     386             55            441               62              86            148
Profit before tax                 2,054          1,488          3,542            1,962           1,696          3,658


HSBC Hong Kong Operations
                     2001 Half-year                                             2000 Half-year ended
                              ended
Figures in        30Jun      31Dec             2001              30Jun                     31Dec             2000
US$m
Net interest      2,073      2,092            4,165              2,003                     1,994            3,997
income

Dividend             12         14               26                 18                        16               34
income
Net fees and        564        608            1,172                567                       601            1,168
commissions
Dealing             134         84              218                124                       105              229
profits
Other income        209        227              436                161                       198              359
Other               919        933            1,852                870                       920            1,790
operating
income

Operating         2,992      3,025            6,017              2,873                     2,914            5,787
income

Staff costs        (619 )     (660 )         (1,279 )             (576 )                    (590 )         (1,166 )
Premises and       (110 )     (124 )           (234 )             (109 )                    (109 )           (218 )
equipment
Other              (199 )     (229 )           (428 )             (170 )                    (242 )           (412 )
Depreciation        (97 )     (102 )           (199 )              (94 )                     (96 )           (190 )
Goodwill              -          -                -                 (1 )                       -               (1 )
amortisation
Operating        (1,025 )   (1,115 )         (2,140 )             (950 )                  (1,037 )         (1,987 )
expenses

Operating
profit before
 provisions       1,967      1,910            3,877              1,923                     1,877            3,800

Customers:
- new specific     (206 )     (243 )           (449 )             (217 )                    (237 )           (454 )
provisions
- releases and      108        135              243                 95                       112              207
recoveries
                    (98 )     (108 )           (206 )             (122 )                    (125 )           (247 )

- net general        11         (2 )              9                 (6 )                       5               (1 )
release/
(charge)
Total bad and
doubtful
 debt charge        (87 )     (110 )           (197 )             (128 )                    (120 )           (248 )

Provisions for
contingent
 liabilities          2          4                6                  1                       (11 )            (10 )
and
commitments

Amounts
written off
 fixed asset        (14 )       (4 )            (18 )               (5 )                      (4 )             (9 )
investments

Operating         1,868      1,800            3,668              1,791                     1,742            3,533
profit

Income from
associated
 undertakings        12          5               17                  9                        12               21

Investments
and fixed
 asset              175         23              198                103                        34              137
disposal gains
Profit before     2,055      1,828            3,883              1,903                     1,788            3,691
tax

HSBC Rest of Asia-Pacific Operations
                    2001 Half-year ended                                            2000 Half-year ended
Figures in     30Jun                31Dec            2001                  30Jun              31Dec          2000
US$m
Net interest   725                  757           1,482                    668                699          1,367
income

Dividend         1                    2               3                      1                  2             3
income
Net fees and   332                  349             681                    363                347           710
commissions
Dealing        196                  199             395                    172                152           324
profits
Other income    24                   34              58                     27                 21            48
Other          553                  584           1,137                    563                522          1,085
operating
income

Operating      1,278                1,341           2,619                  1,231              1,221          2,452
income

Staff costs    (374 )               (397 )          (771 )                 (358 )             (375 )        (733 )
Premises and   (69 )                (74 )          (143 )                  (66 )              (71 )        (137 )
equipment
Other          (186 )               (215 )          (401 )                 (154 )             (189 )        (343 )
Depreciation   (41 )                (41 )           (82 )                  (38 )              (41 )         (79 )
Goodwill        (4 )                 (4 )            (8 )                   (2 )               (3 )          (5 )
amortisation
Operating      (674 )               (731 )        (1,405 )                 (618 )             (679 )        (1,297 )
expenses

Operating
profit before
 provisions    604                  610           1,214                    613                542          1,155

Customers:
- new specific (269 )               (308 )          (577 )                 (231 )             (312 )        (543 )
provisions
- releases and 282                  124             406                    181                189           370
recoveries
                13                 (184 )          (171 )                  (50 )             (123 )        (173 )

- net general    5                   (6 )            (1 )                  116                 72           188
release/
(charge)
Total bad and
doubtful
 debt (charge)  18                 (190 )          (172 )                   66                (51 )          15
/release

Provisions for
contingent
 liabilities   (33 )                (10 )           (43 )                    4                  1             5
and
commitments

Amounts
written off
 fixed asset    (6 )                 (5 )           (11 )                    -                 (3 )          (3 )
investments

Operating      583                  405             988                    683                489          1,172
profit

Income from
associated
 undertakings   48                   46              94                     51                 49           100

Investments
and fixed
asset
 disposal        3                    3               6                      -                 (7 )          (7 )
gains/(losses)
Profit before  634                  454           1,088                    734                531          1,265
tax


HSBC North American Operations
               2001 Half-year ended                                             2000 Half-year ended
Figures in        30Jun      31Dec             2001                30Jun                      31Dec               2000
US$m
Net interest      1,162      1,240            2,402                1,057                      1,095              2,152
income

Dividend             16         13               29                   33                         35                 68
income
Net fees and        437        461              898                  451                        402                853
commissions
Dealing             211        113              324                  132                         86                218
profits
Other income         94        111              205                   68                        110                178
Other               758        698            1,456                  684                        633              1,317
operating
income

Operating         1,920      1,938            3,858                1,741                      1,728              3,469
income

Staff costs        (714 )     (698 )         (1,412 )               (707 )                     (683 )           (1,390 )
Premises and       (155 )     (162 )           (317 )               (157 )                     (150 )             (307 )
equipment
Other              (384 )     (256 )           (640 )               (269 )                     (283 )             (552 )
Depreciation        (58 )      (61 )           (119 )                (54 )                      (60 )             (114 )
Goodwill            (71 )      (71 )           (142 )                (74 )                      (69 )             (143 )
amortisation
Operating        (1,382 )   (1,248 )         (2,630 )             (1,261 )                   (1,245 )           (2,506 )
expenses

Operating
profit before
 provisions         538        690            1,228                  480                        483                963

Customers:
- new specific     (144 )     (258 )           (402 )               (170 )                     (217 )             (387 )
provisions
- releases and       46         52               98                   59                         43                102
recoveries
                    (98 )     (206 )           (304 )               (111 )                     (174 )             (285 )

- net general       (16 )       33               17                   39                         99                138
(charge)/
release
Total bad and
doubtful
 debt charge       (114 )     (173 )           (287 )                (72 )                      (75 )             (147 )

Provisions for
contingent
 liabilities
and
commitments
 (excluding          (2 )       (5 )             (7 )                  -                          1                  1
Princeton)

Amounts
written off
fixed
 asset               (4 )       (1 )             (5 )                  -                          -                  -
investments
Operating           418        511              929                  408                        409                817
profit

Income from
associated
 undertakings         1         (3 )             (2 )                  2                         (4 )               (2 )

Investments
and fixed
assets
 disposal           109         20              129                    4                         31                 35
gains
Profit before
tax (before
 Princeton          528        528             1056                  414                        436                850
provision)

Princeton             -       (575 )           (575 )                  -                          -                  -
provision
                    528        (47 )            481                  414                        436                850


HSBC Latin American Operations
               2001 Half-year ended                                             2000 Half-year ended
Figures in        30Jun      31Dec             2001                30Jun                      31Dec             2000
US$m
Net interest        597        516            1,113                  591                        628            1,219
income

Dividend             12          -               12                    8                          -                8
income
Net fees and        269        240              509                  221                        259              480
commissions
Dealing              (6 )       46               40                   30                         38               68
profits
Other income        183        175              358                  206                        191              397
Other               458        461              919                  465                        488              953
operating
income

Operating         1,055        977            2,032                1,056                      1,116            2,172
income

Staff costs        (418 )     (446 )           (864 )               (439 )                     (467 )           (906 )
Premises and        (79 )      (80 )           (159 )                (83 )                      (84 )           (167 )
equipment
Other              (226 )     (222 )           (448 )               (227 )                     (268 )           (495 )
Depreciation        (34 )      (44 )            (78 )                (33 )                      (34 )            (67 )
Goodwill             (7 )      (10 )            (17 )                 (6 )                       (7 )            (13 )
amortisation
Operating          (764 )     (802 )         (1,566 )               (788 )                     (860 )         (1,648 )
expenses

Operating
profit before
 provisions         291        175              466                  268                        256              524

Customers:
- new specific     (179 )     (261 )           (440 )               (106 )                     (196 )           (302 )
provisions
- releases and       65         69              134                   38                         62              100
recoveries
                   (114 )     (192 )           (306 )                (68 )                     (134 )           (202 )

Argentina             -       (600 )           (600 )                  -                          -                -
general

- net general       (16 )      (18 )            (34 )                  1                         (3 )             (2 )
(charge)/
release
Total bad and
doubtful
 debt charge       (130 )     (810 )           (940 )                (67 )                     (137 )           (204 )

Loss on
foreign
currency
redenomination
in
 Argentina            -       (520 )           (520 )                  -                          -                -

Amounts
written off
 fixed asset         (2 )        1               (1 )                  -                         (1 )             (1 )
investments

Operating           159     (1,154 )           (995 )                201                        118              319
profit

Income from
associated
 undertakings         2         (1 )              1                    -                          1                1

Investments
and fixed
assets
 disposal             3         (3 )              -                   (8 )                       (1 )             (9 )
(losses)/gains
Profit before       164     (1,158 )           (994 )                193                        118              311
tax

14. Registers of shareholders

The Overseas Branch Register of shareholders in Hong Kong will be closed for one
day, on Friday 22 March 2002. Any person who has acquired shares registered on
the Hong Kong Branch Register but who has not lodged the share transfer with the
Branch Registrar should do so before 4.00 pm on Thursday 21 March 2002 in order
to receive the dividend.

     Any person who has acquired shares registered on the Principal Register in
the United Kingdom but who has not lodged the share transfer with the Principal
Registrar should do so before 4.00 pm on Friday 22 March 2002 in order to
receive the dividend. Transfers between the Principal Register and the Branch
Register may not be made while the Branch Register is closed.

     Similarly, transfers of American Depositary Shares must be lodged with the
depositary by 12 noon on Friday 22 March 2002 in order to receive the dividend.

15. Foreign currency amounts

The sterling and Hong Kong dollar equivalent figures in the consolidated profit
and loss account and balance sheet are for information only. These are
translated at the average rate for the period for the profit and loss account
and the closing rate for the balance sheet as follows:
Period end                                                       31Dec01                   31Dec00

Closing :    HK$/US$                                               7.798                    7.800
             £/US$                                                 0.690                    0.670

Average :    HK$/US$                                               7.800                    7.792
             £/US$                                                 0.695                    0.660


16. Litigation

HSBC, through a number of its subsidiary undertakings, is named in and is
defending legal actions in various jurisdictions arising from its normal
business. None of these proceedings is regarded as material litigation.

On 17 December 2001, HSBC USA Inc. announced that it had settled civil law suits
brought by 51 of the 53 Japanese plaintiffs who have asserted claims arising
from the involvement of its subsidiary, Republic New York Securities Corporation
('RNYSC'), with its customers Princeton Global Management Ltd. and affiliated
entities and their Chairman Martin Armstrong (the 'Princeton Note Matter'). It
also announced that it had resolved all of the previously reported regulatory
and criminal investigations arising from the Princeton Note Matter. The
Princeton Note Matter came to light prior to HSBC's acquisition of Republic New
York Corporation, RNYSC's parent, in December 1999.

As part of the resolution, RNYSC, now a dormant subsidiary, pleaded guilty in
federal court in Manhattan to two federal criminal charges arising from the
misconduct of certain of its former executives in assisting Martin Armstrong's
scheme to defraud numerous purchasers of Princeton Notes, which Armstrong
offered for sale in Japan. Following the acquisition by HSBC, RNYSC ceased
active business during the year 2000, and the employment of all the RNYSC
executives associated with RNYSC's misconduct was terminated.

The United States Attorney's Office in its public filing acknowledged HSBC's '
exemplary cooperation' and recommended to the Court that no criminal fine be
imposed on RNYSC. Instead, RNYSC agreed to the imposition of a restitution order
requiring it to make payments totalling approximately US$569 million to
Princeton noteholders, as compensation for their out-of-pocket losses. Since
RNYSC's capital was about US$81 million, HSBC USA Inc. agreed to pay the
remaining amount of compensation due to the noteholders in exchange for their
termination of the pending civil litigation against HSBC USA Inc. and RNYSC, and
in connection with the United States Attorney's Office commitment not to pursue
any claims against RNYSC's parent company or its banking affiliate. In addition,
the settling Princeton noteholders can expect to receive payments totalling
approximately US$72 million from assets held by Princeton's court-appointed
receiver.

At hearings held on 7 and 9 January 2002 the court entered the restitution order
agreed to by RNYSC and the US Attorney's Office and also approved the related
settlement between HSBC and the Princeton Receiver. Promptly thereafter 17
lawsuits filed in the federal court in Manhattan by 51 Princeton noteholders
against HSBC USA Inc., RNYSC and others were dismissed pursuant to the
previously-announced settlements, terminating the plaintiffs' claims for damages
arising from unpaid Princeton Notes with face amounts totalling approximately
US$1 billion. RNYSC has also reached settlements with seven additional Princeton
noteholders who did not file suit.

The after tax cost to date of the settlement is within the range of the price
reduction taken by Republic's largest stockholders, companies controlled by the
late Mr. Edmond Safra, at the time of HSBC's acquisition of Republic. Two of the
noteholders, whose civil suits seek damages arising from unpaid Princeton Notes
with face amounts totalling approximately US$125 million, are not included in
the settlement and their civil suits will continue. The US Government excluded
one of them from the restitution order because that noteholder is being
criminally prosecuted in Japan for its conduct relating to its Princeton Notes,
and excluded the other because the sum it is likely to recover from the
Princeton Receiver exceeds its losses attributable to its funds transfers with
RNYSC as calculated by the US Government.

Under the regulatory settlements RNYSC agreed with the Securities and Exchange
Commission to the revocation of its broker-dealer registration and with the
Commodity Futures Trading Commission to the revocation of various
commodities-related licenses and the payment of a US$5 million civil monetary
penalty. It is also expected that RNYSC will shortly reach an agreement with The
New York Mercantile Exchange resolving Princeton-related matters.

17. Dealings in HSBC Holdings shares

Save for dealings by HSBC Investment Bank plc, trading as an intermediary in the
Company's shares in London, neither the Company nor any subsidiary undertaking
has bought, sold or redeemed any securities of the Company during the year ended
31 December 2001.

18. Statutory accounts

The information in this news release does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985 (the Act). The
statutory accounts for the year ended 31 December 2001 will be delivered to the
Registrar of Companies in England and Wales in accordance with Section 242 of
the Act and filed with the US Securities and Exchange Commission. The auditor
has reported on those accounts; the report was unqualified and did not contain a
statement under Section 237(2) or (3) of the Act.

19. Forward-looking statements

This news release contains certain forward-looking statements with respect to
the financial condition, results of operations and business of the Group. These
forward-looking statements represent the Group's expectations or beliefs
concerning future events and involve known and unknown risks and uncertainty
that could cause actual results, performance or events to differ materially from
those expressed or implied in such statements. Certain statements, such as those
that include the words 'potential', 'estimated', and similar expressions or
variations on such expressions may be considered 'forward-looking statements'.

20. Remuneration

Within the authority delegated by the Board of Directors, the Remuneration
Committee is responsible for determining the remuneration policy of HSBC
including the terms of bonus plans, share option plans and other long-term
incentive plans, and for agreeing the individual remuneration packages of
executive Directors and other senior Group employees. No Directors are involved
in deciding their own remuneration.


The Remuneration Committee applies the following key principles:


- to pay against a market of comparative organisations;


- to offer fair and realistic salaries with an important element of variable pay
based on relative performance;


- to have as many top-performers as possible at all levels within HSBC
participating in some form of long-term share plan; and

- for new employees only, since 1996, to follow a policy of moving progressively
from defined benefit to defined contribution Group pension schemes.


Salaries are reviewed annually in the context of individual and business
performance, market practice, internal relativities and competitive market
pressures. Allowances and benefits are largely determined by local market
practice. The level of performance-related variable pay depends upon the
performance of HSBC Holdings, constituent businesses and of the individual
concerned. Bonus ranges are reviewed in the context of prevailing market
practice and overall remuneration.


In order to align the interests of staff with those of shareholders, share
options are awarded to employees under the Group Share Option Plan and the
Savings-Related Share Option Plan. When share options are granted which are to
be satisfied by the issue of new shares, the impact on existing equity is shown
in diluted earnings per share on the face of the consolidated profit and loss
account, with further details being disclosed in Note 11 of the 'Notes on the
Financial Statements' in the Annual Report and Accounts. The dilutive effect of
exercising all outstanding share options would be only 0.5 per cent of basic
earnings per share.


There were 171,049 full-time equivalent employees at 31 December 2001 (2000:
161,624). During 2001, almost 58,000 employees in 53 countries and territories
applied for savings-related share options. Performance related share options
were awarded to over 34,000 employees worldwide at all levels of the
organisation. In December, over 3,000 employees in the UK began investing in
shares within the newly launched UK Share Ownership Plan and over 10,000 CCF
employees participate in the Plan d'Epargne in France through which they have
subscribed to HSBC shares.

21. Annual Review and Annual Report and Accounts

The Annual Review 2001 and/or Annual Report and Accounts 2001 will be mailed to
shareholders on or about 3 April 2002. Copies may be obtained from Group
Corporate Affairs, HSBC Holdings plc, 10 Lower Thames Street, London EC3R 6AE,
United Kingdom; Group Public Affairs, The Hongkong and Shanghai Banking
Corporation Limited, 1 Queen's Road Central, Hong Kong; Group Public Affairs,
HSBC Bank USA, 452 Fifth Avenue, New York, NY 10018, USA; Credit Commercial de
France, Direction de la Communication, 103 avenue des Champs-Elysees, 75419
Paris Cedex 08, France; or from the HSBC website - www.hsbc.com.

Chinese translations of the Annual Review and Annual Report and Accounts may be
obtained on request from Central Registration Hong Kong Limited, Rooms
1901-1905, Hopewell Centre, 183 Queen's Road East, Hong Kong.

A French translation of the Annual Review may be obtained on request from Credit
Commercial de France, Direction de la Communication, 103 avenue des
Champs-Elysees, 75419 Paris Cedex 08, France.

The Annual Report and Accounts and Annual Review will be available on the Stock
Exchange of Hong Kong's website - www.hkex.com.hk.

Custodians or nominees that wish to distribute copies of the Annual Review and/
or Annual Report and Accounts to their clients may request copies for collection
by writing to Group Corporate Affairs at the address given above. Requests must
be received no later than 11 March 2002.

22. Annual General Meeting

The Annual General Meeting of the Company will be held at the Barbican Hall,
Barbican Centre, London EC2 on 31 May 2002 at 11 a.m.

Notice of the meeting will be mailed to shareholders on or about 3 April 2002.

23. Interim results and first interim dividend for 2002

The interim results for the six months to 30 June 2002 will be announced on
Monday 5 August 2002. It is intended that any first interim dividend for 2002
that is announced on that date would be payable on 9 October 2002 to
shareholders on the Register on 23 August 2002. The Company's shares would be
quoted ex-dividend in London and in Hong Kong on 21 August 2002 and in Paris on
26 August 2002. The American Depository Shares would be quoted ex-dividend in
New York on 21 August 2002.

24. News release

Copies of this news release may be obtained from Group Corporate Affairs, HSBC
Holdings plc, 10 Lower Thames Street, London EC3R 6AE, United Kingdom; The
Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong
Kong; HSBC Bank USA, 452 Fifth Avenue, New York, NY 10018, USA; Credit
Commercial de France, Direction de la Communication, 103 avenue des
Champs-Elysees, 75419 Paris Cedex 08, France. The News Release will also be
available on the HSBC website - www.hsbc.com.



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            The company news service from the London Stock Exchange